Credit Basics
What is Credit?
Borrowing money now to repay later, usually with interest.
What is a credit score?
A number that represents creditworthiness.
What is a loan?
Money borrowed with the promise to repay.
What is a credit card?
A card allowing purchases on credit.
What is a credit report?
A record of credit history.
Name one source of credit?
Banks, credit unions, finance companies, credit card companies.
What is the most common credit score model?
FICO.
What is a secured loan?
A loan backed by collateral.
What is a credit limit?
Maximum amount a cardholder can borrow.
What is identity theft?
Stealing someone's personal information to commit fraud.
What is interest?
The cost of borrowing money.
What score range is considered good?
Typically 670–739.
What is a student loan?
A loan specifically for education expenses.
What happens if you only pay the minimum?
You pay more interest and debt lasts longer.
How often can you get a free credit report?
Once per year from each bureau.
What is collateral?
An asset pledged to secure a loan.
Name one factor that affects credit score.
Payment history, credit utilization, length of credit history, etc.
What is interest rate?
The percentage charged to borrow money.
What is a grace period?
Time to pay balance without interest.
What should you do if you find an error?
Dispute it with the credit bureau.
What does APR stand for?
Annual Percentage Rate.
What hurts your credit score most?
Late/missed payments.
What is default?
Failure to repay a loan.
What is a cash advance?
Borrowing cash from a credit card, usually with high fees.
Name one credit bureau.
Experian, Equifax, TransUnion.