Credit and Debt

Credit

100

What is credit? 

Credit is the ability of the consumer to acquire goods or services prior to payment with the faith that the payment will be made in the future.

200

How can you establish a credit?

paying bills on time every time it's due and having a credit bank account open are two steps. 

300

Name three benefits in having a credit.

• Borrow money at a better interest rate. 
• Qualify for the best credit card deals. 
• Get favorable terms on a new cell phone. 
• Improve your chances of renting a home.
• Receive better car and home insurance rates. 
• Skip utility deposits. 
• Get a job.

400

Name three challenges that one can face while trying to establish a credit. 

• Lack of enough credit history.
• Denied credit application.
• Fraud and identity theft.
• Not being able to pay the bills on time 
• not having a co-signer 

Debt

100

Define debt. 

Debt is money you owe a person or a business. It's when you've borrowed money you'll need to pay back. Usually, people borrow money when they don't have enough to pay for something they want or need.

200

How does someone establish debt? 

A debt is created when one person owes money to another. The person who owes money is called a debtor; the person to whom money is owed is called a creditor.

300

How can debt affect your credit score?

Debt settlement can eliminate outstanding obligations, but it can negatively impact your credit score. Stronger credit scores may be more significantly impacted by a debt settlement. The best type of debt to settle is a single large obligation that is one to three years past due.

400

what are some challenges seen while in debt

Debt stress syndrome is linked to a number of mental health issues, including a massive increase in denial, anger, depression, and anxiety. Among the negative effects of debt stress are low self-esteem and impaired cognitive functioning.

Both credit and debt

100

How are credit and debt related?

While both words have to do with owing money, credit and debt are not the same. Debt is the money you owe, while credit is money you can borrow. You create debt by using credit to borrow money.

200

what challenges would you face if you are in debt and have no credit?

Lenders evaluate people based on how they've used credit in the past. An empty credit report with no evidence of a borrowing history signals to lenders that you're inexperienced. That makes lenders nervous and increases the chances they will deny you for credit like a car loan, credit card or mortgage

300

what are ways to get out of debt and get credit?

1. Understand Your Debt.
2. Plan a Repayment Strategy. 
3. Understand Your Credit History. 
4. Make Adjustments to Debt. 
5. Increase Payments. 
6. Reduce Expenses. 
7. Consult a Professional Financial Advisor. 
8. Negotiate with Lenders.

400

what can't you do with no credit and with debt?

The ability to get loans to buy a house or car, but also smaller things like not having to pay a large security deposit on an apartment or utility.