Credit Concepts
Cost of Credit
Making Decisions
Getting and Building Credit
Know Your Rights
100
The opportunity to obtain money, goods or services in exchange for a promise to pay in the future is called
Credit
100
The amount you borrow or finance and pay interest on is called
Principal
100
Mrs. Rice buys dog food and toys every month. Sometimes she spends a lot of money. Should she use credit? a)Yes b)No c)Only if her credit limit is over $500
B: NO!
100
Mrs. Rice went to the bank to borrow some money for an exotic chicken farm. What 3 things will the creditor consider?
Character, Capacity, Capital: The 3 Cs
100
This law protects the privacy and accuracy of information in a credit check.
Fair Credit Reporting Act
200
One who borrows money or uses the credit is called
A Debtor
200
The cost of credit stated in dollars and cents.
Finance Charge
200
If you are denied credit, what is the first thing you should do? a) Apply for credit somewhere else b) Try again in a year c) Find out if the reasons for denial are valid
C: Find out if the reasons for denial are valid
200
Without taking out a loan, what are 2 things you can do to build credit (based on class discussion)?
Answers vary (Any 2 of these options): -Establish a steady work record -Pay all bills promptly -Open a checking account and don't bounce checks -Open a savings account and make regular deposits
200
Under the Fair Credit Billing Act, you must notify the creditor of a disputed item within 60 days. How much time does the creditor have to respond to the dispute?
2 billing periods.
300
Credit used for personal reasons is called
Consumer Credit
300
This indicates how much credit costs on a yearly basis
APR (Annual Percentage Rate)
300
Mrs. Rice is broke this Christmas. She has only enough money to spend $20 on each family member. Should she charge $500 to her credit card for Christmas presents this year? a) Yes. Her family really needs presents this year. b) No. This isn't a need. c) Only if she can pay it back within the next 6 months.
B: No. This isn't a need!!!
300
A creditor is looking at your current debts and living expenses. They are looking at your ________
Capacity
300
This law ensures customers are fully informed about cost and conditions of borrowing.
Truth in Lending Act
400
You are able to buy needed items now. This is a/an _______ of credit.
Advantage
400
Repayment at regular intervals, staying within a credit limit, and interest charges are all characteristics of what type of credit?
Revolving Credit
400
If you cannot make payments on your credit card this month, what should you do?
Notify your creditor
400
A lender asked Mrs. Rice how long she has lived in her current home. Mrs. Rice is a hermit and has been living at the same place for 20 years. In the eyes of the lender, her __________ is good.
Character
400
Mrs. Rice lost her credit card on Saturday but she didn't report it until Monday. If the card was used, what dollar amount is the maximum Mrs. Rice is liable for?
$0. Mrs. Rice reported the dispute in less than 2 BUSINESS days.
500
When a creditor is looking at assets such as real estate or savings, they are analyzing your ________.
Capital
500
Your monthly electric bill is $500. This is an example of a type of credit.
Single Payment Credit
500
Mrs. Rice has horrible credit and nobody will loan her money anymore. She wants to borrow another $5000 for new designer socks. What type of agency can she go to for sock money?
Consumer Finance Company
500
Name the 3 credit bureaus
TransUnion, Equifax, Experian
500
In 2009, a law was passed to protect younger generations from the dangers of credit. What is the full name of this act?
CARD Act: Card Accountability Responsibility Disclosure
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