Credit Basics
Borrowing money with a promise to repay later.
What is credit?
Paying only this amount on your credit card can cause interest to pile up for years.
What is the minimum payment?
The most widely used credit score range in the U.S. falls between these two numbers.
What is 300 to 850?
What is 30 days?
This federal law requires lenders to clearly disclose loan terms like APR and total finance charges.
What is the Truth in Lending Act?
The cost of credit on a yearly basis, expressed as a percentage.
What is an Annual Percentage Rate (APR)?
A loan that requires equal payments over time, like a car loan, fits into this category.
What is fixed repayment (installment) credit?
This practice helps consumers avoid late fees and negative credit reporting by ensuring payments are made on time each month.
What is setting up automatic payments?
You are legally entitled to receive this document for free from each bureau once per year.
What is a credit report?
Combining several debts into one payment with a new loan is known as this strategy.
What is debt consolidation?
This federal law ensures creditors furnish complete and accurate information to borrowers; it also regulates the consumer reporting agencies.
What is the Fair Credit Reporting Act?
Name ONE strategy for responsible credit card use.
Make on time payments.
Use no more than 30% of your credit limit.
Paying credit card balances in full every month
Applying for only credit cards that are needed
Keeping track of all charges by keeping receipts and using a check register
Checking the monthly credit card statement for errors
This is what it's called when a bank and/or lender pulls your credit report.
What is a "hard inquiry"?
A loan backed by collateral like a house or car is called this.
What is a secured loan?
This factor has the greatest impact on your credit score.
What is payment history?
This bankruptcy option involves a court-approved repayment plan over several years.
What is Chapter 13 bankruptcy?
This law limits how much you’re responsible for if your credit card is stolen and used without permission.
What is the Fair Credit Billing Act?
Closing and old credit card account could lower your score because of this FICO credit score category (which accounts 15% of your credit score).
What is your Length of Credit History?
Credit cards fall under this type of credit, which allows repeated borrowing up to a limit.
What is revolving (or open-end) credit?
This part of a loan payment decreases over time in an amortized loan.
What is interest?
Experts recommend keeping this ratio below about 30% to protect your credit score.
What is credit utilization?
This strategy focuses on paying off the smallest balances first to gain motivation.
What is the debt snowball method?
Harassment, threats, and calling at unreasonable hours are banned under this consumer protection law.
What is the Fair Debt Collection Practices Act?
This is the maximum amount of money that will be extended to a person by a credit card or financial institution.
What is your credit limit?
The lender assesses a borrower's ________ to determine if they will issue them a loan/credit, and at what interest rate.
What is a borrower's "creditworthiness"?
What are Character, Capacity, Capital, Conditions, & Collateral.
A balance transfer with a 0% introductory rate may seem helpful, but this is the long‑term risk if the balance isn’t paid off before the promo period ends.
What is ending up with higher interest rate?
There are three major U.S. credit bureaus, each which independently collect financial data to create credit reports, which are used to generate credit scores. Name all three (3).
Who are Equifax, Experian, and TransUnion?
Student loans and child support usually fall into this category during bankruptcy.
What are non-dischargeable debts?
This act serves as the foundation for many consumer credit protections and includes rules on credit reporting and billing.
What is the Consumer Credit Protection Act?
This legally binding document outlines a credit card’s interest rates, fees, grace period, billing methods, and the cardholder’s rights and responsibilities.
What is a credit card agreement?