Credit Basics
the privilege of using someone else's money for a period of time
*What is credit?*
Type of credit where you make regular fixed payments over time
*What is installment credit?*
Company that gathers information on credit users
*What is a credit bureau?*
Law requiring clear disclosure of credit terms
*What is the Truth-in-Lending Act?*
Formula for calculating simple interest
*What is I = P × R × T?*
the three C's of credit evaluation
*What are Character, Capacity, and Capital?*
Type of credit card that requires full payment each month
*What is a charge card?*
Document showing transactions in your account during a specific period
*What is a statement of account?*
Act protecting consumers from incorrect billing
*What is the Fair Credit Billing Act?*
The P in the interest formula
*What is Principal?*
this is the cost of using someone else's money
*What is interest?*
Property used as security for a loan
*What is collateral?*
Legal agreement between borrower and lender
*What is a credit contract?*
Maximum liability for unauthorized credit card use
*What is $50?*
If you borrow $100 at 12% for 1 year, the interest would be this amount
*What is $12?*
Two main parties involved in a credit transaction
*Who are the debtor and creditor?*
Type of account where you can spend up to a certain limit and carry a balance
*What is a revolving account?*
Schedule showing how loan payments are divided between principal and interest
*What is an amortization schedule?*
Number of years bankruptcy stays on credit report
*What is 10 years?*
Term for the total yearly cost of credit including fees
*What is Annual Percentage Rate (APR)?*
The foundation of any credit relationship
*What is trust?*
Credit cards linked to specific organizations or causes
*What are affinity cards?*
Date on which a loan must be repaid
*What is the maturity date?*
Organization offering free/low-cost credit counseling
*What is Consumer Credit Counseling Services (CCCS)?*
If a 2-month loan starts January 15, this is the due date
*What is March 15?*