Types of Loans & Credit
A loan that requires collateral (e.g., mortgage or car loan).
What is a secured loan?
Total yearly cost of borrowing, including interest and fees.
What is Annual Percentage Rate (APR)
What is the primary purpose of a credit score?
What is 'to evaluate creditworthiness and lending risk'?
This law requires lenders to disclose credit terms, including APR
What is the Truth in Lending ACT of TILA?
This person's purpose is to provide additional security to the lender and help a borrower qualify for a loan.
What is the purpose of a co-signer on a loan?
What type of credit allows a borrower to use funds repeatedly up to a limit?
What is Revolving credit?
Time between a billing cycle and due date when no interest is charged.
What is Grace Period?
What factor has the greatest impact on a credit score?
What is Payment history?
This act protects consumer credit information and ensures credit report accuracy.
What is the Fair Credit Reporting Act (FCRA)?
This type of inquiry does not impact your credit score
What is a soft inquiry?
What is the main difference between secured and unsecured credit?
What is Secured credit requires collateral, while unsecured credit does not?
Unethical lending practices like charging excessive fees and high-interest rates.
What is Predatory Lending?
How long does negative information typically stay on a credit report?
What is 7 years?
This act helps prevents debt collectors from using harassment or unfair collection practices.
What is the Fair Debt Collection Practices Act (FDCPA)?
This compares a borrower's total monthly debt payments to their income to assess borrowing capacity.
What is the debt-to-income ratio?
What is the most common type of mortgage loan?
What is a Fixed-rate mortgage?
Compares total monthly debt payments to income to assess borrowing capacity.
What is Debt-to-Income Ratio (DTI)?
Experian, Equifax, and TransUnion
What are the three major credit bureaus?
This regulations helps enforces the Truth in Lending Act (TILA) and requires lenders to disclose loan costs.
What is Regulation Z?
This type of loan typically has the lowest interest rate: personal loan, payday loan, mortgage, or credit card cash advance?
What is a mortgage loan?
What is debt consolidation, and why do people use it?
Debt consolidation is the process of combining multiple debts into a single loan, often to secure a lower interest rate and simplify payments.
Amount of credit used divided by available credit; recommended max is 30%.
What is Credit Utilization Ratio?
What is a credit freeze, and how does it protect consumers?
What is A credit freeze prevents new credit accounts from being opened in the consumer’s name, helping prevent fraud and identity theft?
This Regulation enforces the Equal Credit Opportunity Act (ECOA) and protects borrowers from credit discrimination.
What is Regulation B?
These are the three main sources of consumer credit
What are Commercial banks, credit unions, and consumer finance companies?