Credit & Interest Rates

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Revolving credit is...

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a type of credit that can be used repeatedly up to a certain limit as long as the account is open and payments are made on time.

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What is a credit report?

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A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

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Which is the most costly and least desirable payment for a revolving balance account such as a credit card? Options: paying only the minimum monthly payment, paying more than the minimum monthly payment, paying the entire balance every month, paying a flat $25 monthly payment

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paying only the minimum monthly payment

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This is a financial arrangement in which money is borrowed for a purchase and paid back at a later date. It allows consumers to make purchases that they wouldn’t be able to afford if they had to pay the full price in one installment.

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Credit

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This type of interest never changes during the life of a loan. No matter how long the loan period is or the economic conditions, you will pay the same interest rate.

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Fixed Interest

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This is an interest rate that changes periodically based on economic conditions.

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Variable Interest

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This is a three-digit number that represents how likely a borrower is to repay a debt.

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Credit Score

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Based on the information in a borrower’s credit report and ranges from: 200-500, 300-800, 250-850, 300-850

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300-850

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What are the 3 Credit Reporting Agencies in the U.S.?

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Equifax, Experian, and Trans Union

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Which of the following helps raise a low score or maintain a high one?
Options:
Reduce the number of open credit accounts at once.
Keep credit card balances below 25% of the limit.
Make payments on time.
All of the answer choices are correct.

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All of the answer choices are correct.