Types of Loans & Credit
A loan that requires collateral (e.g., mortgage or car loan).
What is a secured loan?
Total yearly cost of borrowing, including interest and fees.
What is Annual Percentage Rate (APR)
What is the primary purpose of a credit score?
What is 'to evaluate creditworthiness and lending risk'?
These people are against debt and live debt-free as much as possible.
What is debt averse people?
This person's purpose is to provide additional security to the lender and help a borrower qualify for a loan.
What is the purpose of a co-signer on a loan?
What type of credit allows a borrower to use funds repeatedly up to a limit?
What is Revolving credit (or Line of Credit)?
Time between a billing cycle and due date when no interest is charged.
What is Grace Period?
What factor has the greatest impact on a credit score?
What is Payment history?
Concessions that a 'credit risk' borrower must make.
What is higher APR, higher down-payment, a cosigner, collateral?
This type of inquiry does not impact your credit score
What is a soft inquiry?
What is the main difference between secured and unsecured credit?
What is Secured credit requires collateral, while unsecured credit does not?
Unethical lending practices like charging excessive fees and high-interest rates.
What is Predatory Lending?
How long does negative information typically stay on a credit report?
What is 7 years?
This is the smallest allowable amount that a person must pay each month on their credit card balance (if not paying in full).
What is a minimum payment?
This compares a borrower's total monthly debt payments to their income to assess borrowing capacity.
What is the debt-to-income ratio?
What is the most common type of mortgage loan?
What is a Fixed-rate mortgage?
A low introductory rate for a limited period of time, designed to lure new customers to a credit card company.
What is a promotional rate?
Experian, Equifax, and TransUnion
What are the three major credit bureaus?
This is what a lender does when a borrower does not make payments on their secured loan in order to repay the loan.
What is they repossess the collateral and liquidate it?
This type of loan typically has the lowest interest rate: personal loan, payday loan, mortgage, or credit card cash advance?
What is a mortgage loan?
What is debt consolidation, and why do people use it?
Debt consolidation is the process of combining multiple debts into a single loan, often to secure a lower interest rate and simplify payments.
The amount of credit extended to a borrower on a line of credit or credit card.
What is a credit limit?
What is a credit freeze, and how does it protect consumers?
What is A credit freeze prevents new credit accounts from being opened in the consumer’s name, helping prevent fraud and identity theft?
These are the two things that fixed rate installment loans all have in common.
What is a regular monthly payment amount for a fixed period of time?
These are the three main sources of consumer lending.
What are Commercial banks, credit unions, and consumer finance companies?