Vocabulary
Something, typically money, that is owed or due.
What is debt?
A company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.
What is a credit bureau?
The percentage of a consumer's monthly gross income that goes toward paying debts.
What is the debt to income ratio?
A federal law designed to protect credit card users from abusive lending practices by card issuers. Its primary goals are the reduction of unexpected fees and improvements in the disclosure of costs and penalties.
What is the card act?
The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
What is credit?
Equifax, Experian and TransUnion
What are the three major credit bureaus?
You don't want debt. Debt is bad!
What is false about debt?
Is this a want or a need?
Does it fit into my budget?
Sleep on it.
What are some good rules/questions for using credit?
The yearly rate that is charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
What is the annual percentage rate (APR)?
300-850
What is the now-standard credit score range?
The total borrowing should not exceed 20% of yearly net pay (excluding mortgage). Monthly payments should be no more than 10% of monthly net pay.
What is the 20/10 rule?
Character
Capacity
Collateral
What are the three C's of credit?
A fee charged when a withdrawal from an individual's bank account exceeds the available balance.
What is an overdraft fee?
Late payments, bankruptcy, hard inquiries and amount of debt (debt-load).
What are some things that will negatively affect your credit score?
A legal procedure for when a person or business cannot repay their outstanding debts; provides debt relief but has some negative consequences.
What is bankruptcy?
A- At least pay the minimum due
B- Best practice to pay in full
C- Caution, smaller payments take longer to pay off and accrue high interest
What are the ABC's of having a credit card?
A numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual.
What is a credit score?
7 years
What is the amount of time it takes for information to come off of your credit report?
A debt reduction strategy, whereby one who owes on more than one account pays off the accounts starting with the smallest balances first while paying the minimum payment on larger debts.
What is the debt snowball method?
Apply for a secured credit card.
Pay all of your bills on time.
Only borrow what you can afford.
Let your accounts age.
What are some ways you can establish good credit?