Understanding Credit
The cost (or income) of borrowing (from loaning) money.
What is Interest?
An asset a borrower pledges to a lender as security for repayment of a loan.
What is Collateral?
The total cost of borrowing money for one year, expressed as a rate.
What is Annual Percentage Rate (APR)?
The payment made by a tenant to an asset owner for the use of property, land, or other assets, for a specified period of time.
What is Rent?
A numerical representation of an individual's creditworthiness, calculated based on their credit history and more recent credit behaviors.
What is a credit score?
The ability to borrow money or access goods and services with the agreement to pay back the amount borrowed, typically with interest, at a later date.
What is Credit?
Which type of credit is typically used for utility bills and requires payment at the end of the billing period?
What is Open Credit?
Additional costs that credit card issuers charge their customers if they don't pay at least the minimum monthly payment amount on their credit card statement
What is a Late Fee?
An interest rate that stays constant, regardless of what happens to economic and/or financial conditions over the term of a loan.
What is Fixed Interest Rate?
A detailed report of a person's credit history prepared and maintained by Credit Reporting Agencies (also called Credit Bureaus).
What is a credit report?
A sum of money that is borrowed, with the expectation that it will be paid back with interest over a specified period of time.
What is a Loan?
Which type of credit requires the borrower to make equal monthly payments over a specified period?
What is Installment Credit?
The period where you can pay your balance without incurring interest charges
What is a grace period?
An interest rate that adjusts periodically based on changing economic and/or financial conditions, also called a variable rate or adjustable rate.
What is a Floating Interest Rate?
A company that creates and maintains credit reports and credit scores.
What is a Credit Reporting Agency (CRA)
An individual or entity that lends money or extends credit to another, also called a lender.
What is a Creditor?
A loan used to purchase real estate where the underlying property is pledged as collateral for the loan.
What is a Mortgage?
A credit card that requires a cash deposit as collateral.
What is a secured credit card?
A report showing loan principal and interest amounts owed, and due dates, for each payment.
What is an Amortization Schedule?
The most critical factor in determining your FICO credit score?
What is payment history?
A percentage charged on the principal amount of a loan, representing the cost of borrowing and the return earned, on savings or investments.
What is Interest Rate?
Which source of credit typically targets individuals who may not qualify for traditional loans and charges high-interest rates?
What are Payday Lenders?
A card that provides points, cash back, or miles for purchases.
What is a rewards credit card?
An upfront partial payment made at the time of purchase, representing a percentage of the total purchase price, to secure the transaction and reduce the amount financed by a loan.
What is a Down Payment?
The range from which credit is the lowest to highest credit amount
What is 300 to 850?