26 Flashcards
(16 cards)
developing a credit history
apply, be approved, use credit, make payments
when applying, they may check ur credit worthiness
when selecting a card, consider
interest rate
extra fees
whether interest rate will change
whether a cosigner is needed
whether there is a grace period
what will the cost of credit be
who will accept the card
what is the credit limit
will i be able to use the card to get cash
annual percentage rate
cost of credit on a yearly basis
cash advance
a loan given in cash by a credit card company in anticipation of the borrower being able to pay it
checking for credit worthiness
capacity : ability to pay
character : trustworthiness
capital : the money an applicant has beyond debts and what ur actually earning
credit limits
if a person pays their bills on time, most creditors will raise their credit limit
loan vs mortage
loan is money lent by one party to another at interest, paid in installments and req collateral (5 years)
mortage is a loan agreement secured by property (15 to 20 years)
interest rates
variable : fluctuates over the life of the loan
fixed : interest rate remains the same
down payment and principal
down payment is portion of the total cost that is paid when a product or service is purchased
principal is amt of borrowed money thats still owed and what the interest is based on
finance charge
total amt it costs the borrower to have the lender finance the loan
includes interest rate and additional charges like application fee
secured vs unsecured loans
secured : backed by collateral
unsecured loans have higher interest rates
credit card debt is unsecured, mortages and loans on vehicle or property is secured
maintain credit rating
payment history
outstanding debt (if u have less debt, then ur more trustworthy)
length of credit history
recent inquiries abt ur credit report
types of credit in use
staying in income limits
consumers should not use more than 20 percent of ur income for credit payments
signs of credit trouble
u cant make monthly loan payments and minimum monthly payments on ur credit cards
u receive second and third payment due notices from creditors
u get calls from bill collectors
ur wages are being garnished (companies take some of ur paycheck if u stop paying)
creditor takes back the item u purchased on credit and repossess or take back the item
cosigner and grace period
cosigner is smone who agrees to be responsible for a debt if the main applicant doesnt repay
grace period is amt of time allowed to repay a debt without having to pay interest or make a late payment before a penalty is charged
minimum payment
monthly statement of charges : owed and minimum amt due
