Vocab
Using Credit
Credit/ charge questions
Applying for Credit
Situational question
100
What is an asset?
A valuable possession a person owns. House, Car, Savings account.
100
What are 2 common ways to use credit?
Buy now, pay later. Use for emergencies/ trips.
100
Who or what offers charge accounts?
Businesses- small or corporate like the Post Bulletin may set up an account with customers as long as the person pays the balance each month, then no fee is added.
100
What do creditors look at before approving a credit card?
Credit history, job history and ability to repay.
100
What is Identity Theft?
When someone takes your personal information and pretends they are you. They may put bills in your name, use charge cards.
200
What is a credit rating?
An estimate of how likely a person is to pay bills on time based on past records.
200
What are 2 advantages of using credit?
Carry 1 card verses carrying around large sum of money.- safer. Can use goods/services while paying for them. Example- I'm using new fridge, but making monthly payments.
200
What happens if you use a credit card and only make a minimum payment for 12 months (just an example)?
You may have to pay 2-3xs as much as the original cost due to interest being added.
200
To prevent a bad credit rating, what must you do if you cannot pay a bill on time
Call the company and explain the situation.
200
Where can Identity Theft occur?
Over internet websites-access to public information. Someone looks in mail box/ trash cans for information to use.
300
What is collateral?
Something of value held by a lending institution in case a loan is not repaid.
300
What are 2 disadvantages of using credit?
Encourages impulse buying. If people don't make payments, could go into debt and have to pay interest. Goods and services cost more when purchased with credit instead of cash. Credit ties up future income.
300
What is a credit agreement?
A written contract that legally binds lender and borrower to specific credit terms.
300
What are 3 of 5 ways to establish credit history?
1) Open a savings account and a checking account. 2) Join a credit union and take out a low- interest loan. 3) Apply for a department store or gas card. 4) Purchase an item in a store on a layaway plan. 5) Always make payments on time to develop a good credit record.
300
What is a signature loan?
Your signature signing off on the loan agreement saying you promise to pay that amount by a certain time.
400
What is a credit line?
The maximum amount that can be charged on a credit card.
400
What is one thing you should consider before you use credit to pay for something?
1) Can you do without the item now? 2) Will you have problems repaying the debt? 3) Are you already spending 20% of your net pay on installment debt?
400
T/F Do you need to fill out a credit application when applying for credit?
True
400
What are 3 risks that creditors look for when people apply for credit?
1) IF they have good credit- needs to be honest. 2) Steady job/income 3) Lived in same area for a few years. 4) make regular payments on time 5) has assets.
400
What is this an example of? Ted is ready to buy his first car, he researches loans, information about cars. Then he talks to his sister about the loan. What is it called if his sister is on the same loan as Ted?
Co Signer- signs loan with borrower and held responsible if borrower does not pay back loan.
500
What does a credit bureau do?
The organization gathers financial information on individuals for businesses to use as a credit reference.
500
What are 4 types of credit?
Charge accounts, Credit cards, installment credit and loans.
500
What should a person do before signing a credit agreement?
Look over document and make sure finance charges are correct. Don’t fill in blanks.
500
Sally went to Best Buy to fill out the best buy credit card application. She has a full time job as a sales clerk, has had her apartment for 3 years, and her credit score is excellent. If you were the credit card consultant, would you offer Sally a Best Buy card? Why?
Yes 1) She has a great credit score, reliable job history, and lived in area for a significant time period.
500
What has been your greatest achievement this year? Note: Each of you needs to say 1 idea in order to get all 500 points :)
my answer is: Working with you in class, observations at internships and our follow up meetings with you all. Thank you for this year- you all will do great on the test, and be very successful in the next steps.
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