Credit Flashcards
(21 cards)
What is the impact of a positive credit history?
Positive credit scores will provide you with lower interest rates, allow you to borrow more money, and reduce borrowing costs. You may also save money on insurance as some companies view you as less of a risk.
What are the potential consequences of having no credit?
It may be very challenging to apply for a mortgage (home loan).
What are the components of a credit report?
- Personal information: Name, current and former addresses, birth date, social security number, phone numbers. 2. Credit Accounts: Current and historic credit account details including credit limit, account balances, payment history, date account was opened and closed, and creditor name. 3. Collection items. 4. Public Records: Liens, foreclosures, bankruptcies, civil suits, and judgments.
How is a credit score calculated?
Your credit report makes up your credit score, which is calculated using the FICO scoring model.
What is the range of FICO Scores?
FICO Scores range from 300 to 850. The higher your score, the lower your interest rates will be on loans.
What factors impact a person’s ability to borrow money?
Factors include income and commitments, lifestyle/living expenses, credit history, property deposit (on car and auto loans), loan type, term, interest rate, and assets such as the value of the property (on mortgages).
What makes someone a good borrower?
Make payments on time, understand the total cost of purchasing something on credit, and being informed.
What is the difference between simple and compound interest?
Simple Interest is a set amount. Compound interest is earning interest on interest.
What are the problems associated with not having enough cash for borrowing?
Investments to increase your wealth, such as buying a home or paying for college.
Compare renting to buying in Erie, PA.
You can have an asset after 15-30 years with buying.
What challenges exist when buying in larger cities?
It may be very difficult to buy because of the high property values.
What should you consider when borrowing for college?
Most do not have enough cash to pay for college. If you pursue a career that is in demand, you may justify taking a loan.
What should you do regarding college expenses?
Don’t overspend; colleges vary in prices. Always compare the total cost.
What are the responsibilities of borrowers?
Understand the terms, pay the money back, and communicate needs.
What should borrowers know before accepting credit?
Read the terms of the agreement and repay the money with interest by the agreed upon date.
What rights do borrowers have?
You have the right to see the APR and fees in writing before accepting credit and be notified of any changes.
What are the responsibilities of lenders?
Provide the client with all information needed, treat clients fairly and equally, and have the right to enforce the contract.
What can lenders do to recover unpaid amounts?
Lenders can enforce the contract by legal means.
What are responsible credit card habits?
Budget, do not overspend, understand the total cost if you do not pay the full balance, and pay all credit cards back in full, on time, every month.
How can responsible credit card usage impact your credit?
Responsible credit card usage can help build your credit.
What are the consequences of irresponsible credit card usage?
Irresponsible credit card usage can make it very difficult to borrow future money or have low interest rates.
