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Flashcards in Good Credit Deck (15):

List some positive uses of credit

Obtain loans at favorable rates, convenience, emergencies, own expensive products sooner, obtain an education


List some negative uses of credit

Tempting to spend more money, reduces financial flexibility and buying power, buying costly items on credit that you can't afford, interest is costly


Define APR

Annual percentage rate


What is a debt limit?

Overall maximum you believe you should owe based on your ability to meet repayment obligations. Debt-to-income method or Debt Payments to Disposable Income method.


What is the purpose of usury law?

Establishes maximum loan amounts, interest rates, and credit-related fees for different types of small loans from various sources.


What is a loan used to pay off all other debits and reduce the total monthly payments?

Debt Consolidation loan


Summarize Fair Credit Reporting Act

Credit reports must only contain accurate information. It allows consumers to correct or challenge errors or omissions. Regulates consumer reporting agencies.


Fair Credit Billing Act

Protects consumers from unfair billing practices and provides mechanisms for addressing billing errors.


Equal Credit Opportunity Act

Creditors can't discriminate against any applicant. If you are denied credit, they must give you a written explanation of the reasons for denial.


Credit Card Act

To establish fair and transparent practices relating to the extension of credit. Must give notice of rate increases, can't market excessively to young people. Notice of payment terms.


What do you call an arrangement whereby you provide one monthly payment to a credit counseling agency which then distributes funds to all of your creditors?

Debt Management Plan


How can you prevent unauthorized credit accounts from being opened in your name?

Place a security freeze on your credit


What expresses cost of credit as a percentage rate?

APR - Annual Percentage Rate


Which Act prohibits third-party debt collection agencies from using abusive, deceptive, or unfair practices to collect past-due debts?

Fair Debt Collections Practices Act


Act that requires lenders to disclose to credit applicants both the interest rate expressed as an annual percentage rate and the finance charge.

Truth in Lending Act