Vocab
What is: the investigation of a person's income, current debts, personal life, and past history of borrowing and repaying debts.
Credit Check
A 15 years old wants to buy an icecream sunday but is $1 short. Should she apply for a credit card? Why or why not?
NO!
An icecream sunday is not a big ticket item and not worth getting a credit card for.
Name 1 factor that determines a person's creditworthiness.
Income; debts; past history; capacity to pay; character; collateral
What act requires creditors to keep consumers fully informed about the costs an conditions of borrowing?
The Truth in Lending Act
Depository institution owned and operated by its members to provide savings accounts and low-interest loans only to its members.
Credit union
Something of value that a borrower lets the lender claim if a loan is not repaid.
Collateral
Justin is 25 years old and wants to buy a new car in the next few years. He cannot afford to buy a car in full, but could make monthly payments as needed. Should he apply for a credit card? Why or why not?
Yes!
Justin can use a credit card to purchase this big ticket item and use it to make monthly payments on his new car.
What is the difference between a secured loan and an unsecured loan?
A secured loan is backed up by collateral and an unsecured loan is only backed up by a promise to repay.
Which act declares that those who provide credit cannot deny you such credit solely on the basis of your race, religion, national origin, gender, marital status, or age.
The Equal Credit Opportunity Act.
Credit device that allows a person to make purchases at many kinds of stores, restaurants, and other businesses without paying cash.
Credit card
Private business that investigates a person to determine the risk involved in lending to that person.
Credit bureau
Aiden has a credit score of 387. How can he increase his credit score & repair the damages made?
-pay back current debt
What is a credit score?
+ 200 if you can give the credit score range.
A representation of your credit history;
A representation of how you've paid off previous debts;
300-850
A law restricting the amount of interest that can be charged for credit.
State Usury Laws
Rating of the risk involved in lending to a specific person or business.
Credit Rating
The state of legally having been declared unable to pay off debts owed with available income.
Bankruptcy
Your friend suggests co-signing a loan for them. What are you risking by doing this?
Who is the person that signs a loan contract along with the borrower, and promises to repay the loan if the borrower does not?
Cosigner
When you declare bankruptcy, how long do those bankruptcy proceedings remain on your credit record?
10 years
Loan that is backed up by collateral.
Secured loan
Law restricting the amount of interest that can be charged for credit.
Usury law
One credit card has a low-interest rate, but has a smaller maximum credit.
The other credit card has a higher maximum credit, but also has a higher interest rate.
Which do you choose and why?
SUBJECTIVE!
Depends on your ability to make payments, depends on the purchases you intend to use the credit card for, etc.
List one consequence of not paying off you debt.
-The lender may hire a collections agency to recover funds.
-Lender may take a loss and raise interest rates.
-Bad credit history
-Items could be repossessed.
When you file for bankruptcy, debtors must give up most of what they own to redistribute it to their creditors.
What specific debt still has to be paid regularly?
Taxes
Loan guaranteed only by a promise to repay it.
Unsecured loan