Credit Reports
Your ability to repay borrowed money responsibly and on time.
What is creditworthiness?
The ability to borrow money to purchase goods or services now and pay for them later.
What is consumer credit?
The maximum amount you are allowed to borrow at one time.
What is your credit limit?
Loans are typically used for one specific purpose and come with a formal contract. This contract outlines the borrowing terms, including how much is borrowed, the interest rate, and how the loan will be repaid.
What are consumer loans?
A forward-looking, detailed plan based on expected income and expenses that assigns a monetary amount to each purpose.
What is a budget?
The 3 Cs of Credit.
What are Capacity, Character, and Collateral?
Measures how much of your monthly income goes toward paying consumer debt.
Calculated as: Total Monthly Consumer Debt ÷ Monthly Take-Home Pay
What is Debt Safety Ratio?
Type of credit that allows repeated borrowing up to a preset limit, and borrows can carry a balance from month to month, and your credit is “revolving.”
What is Open Account Credit?
An item of value pledged to secure a loan. If the borrower fails to repay the loan, the lender has the legal right to take the item.
What is collateral?
Assets (what you own) — Liabilities/Debts (what you owe) =
What is net worth?
Numerical summary of the information in your credit report.
What is a FICO Score?
Legal process for individuals unable to repay debts.
What is bankruptcy?
Typical credit card interest rates.
What is 20–30% or higher?
In many cases, buyers finance 80–90% of the vehicle’s cost, while the remaining 10-20% must be paid up front at time of purchase.
What is a down-payment?
Budeting system which assigns every dollar of income a job so that Income — Expenses = 0
What is a zero-based budget?
The most important part of a credit score.
What is payment history (35%)?
The three main credit bureaus in the U.S.
What are: Equifax, Experian, and TransUnion?
Credit cards should be used for _______________, NOT FINANCING!
Requires the borrower to repay the entire loan amount plus interest all at once on a specific date.
What is a single payment loan?
According to Ron Blue, the three things you can do with money.
What is: spend it, save it, and give it away?
The best possible FICO score.
What is 850?
Legal recourse for individuals unable to repay debts which liquidates non-exempt assets to repay creditors.
Only paying the smallest amount required, resulting in excessive interest payments and years to repay.
What is the minimum payment trap?
When consumers finance a purchase, lower monthly payments but more interest paid over time generally equates to this.
Payroll taxes withheld from an employee’s paycheck and sent to the federal government by the employer which fund Social Security and Medicare.
What is FICA?