What is a credit report?

A list of all your credit accounts and payments

What is the main reason it's important to check your credit report?

To make sure there are no mistakes

What is credit utilization?

The percentage of your available credit that you are using.

How can you calculate your credit utilization ratio?

Divide your total credit balances by your total credit limits and multiply by 100.

What does the narrator say is a good first step to improving your credit score?

Understanding how credit scores work.

What is a secured credit card?

A credit card where you put down money to secure the amount you can borrow.

Why is it important to check if a credit card issuer reports your payments to the credit bureaus?

Because you want to make sure your good payment history will help you build credit.

What is a co-signer and why might someone need one?

A co-signer is someone who agrees to pay your debt if you can't. You might need one if you don't have a good credit history.

What is a good first step to take when you are trying to build credit? Options: Get a loan from a friend. Open a checking account at a bank. Apply for a credit card. Buy a new car.

Open a checking account at a bank.

What is a secured credit card?

A credit card where you put down money to secure the amount you can borrow.

Someone who agrees to pay your debt if you can't.

What is the difference between a prepaid card and a credit card?

A prepaid card is like a debit card, and a credit card lets you spend money you don't have, but you have to pay it back.

What is one consequence of using a credit card if you don't pay it off?

It can lead to debt if you don't pay it off.

What is one advantage of using a debit card?

It can be used to take out cash from ATMs.

What is one thing that the credit card says is a trade-off for having a generous credit limit?

It charges interest on balances.

What does the prepaid debit card say it is good for if you are traveling?

It can be used in lots of different places.

What is the main reason Yaneli is excited about getting her 5th credit card?

She has a higher credit limit, which helps her credit score.

What is the main reason why Yaneli suggests avoiding two-cycle billing?

It can lead to higher interest charges.

What is one reason why a rewards credit card might not be a good choice for someone?

Rewards credit cards can have high interest rates if you don't pay your balance each month, can have annual fees, and can have limits on how much you can earn in a year.

What is one thing you should look for when deciding if a rewards credit card is right for you?

If the card has a limit on how much you can earn in a year.

What is one thing you should consider before getting a rewards credit card?

If you have good credit, if you can pay off your balance each month, and if you can use the rewards.

What is one example of a reward that you can earn with a rewards credit card?

Cash back, Points, Miles, All of the above

What is one thing you should look for when deciding if a rewards credit card is right for you?

If the card has a limit on how much you can earn in a year

What is a 'line of credit'?

A line of credit is the amount of money you can borrow from a credit card company.

What happens if you only pay the minimum amount on your credit card each month?

You will pay more interest and it will take longer to pay off your debt.

Why are credit card companies happy when people only pay the minimum amount each month?

They make more money from interest.

What is a 'deadbeat' in the eyes of a credit card company?

Someone who pays off their debt every month and never pays a late fee.

What is the main reason why credit card companies make money?

They charge interest on the money you borrow.

What is the difference between a credit card and a payday loan?

Credit cards have lower interest rates than payday loans.

Loan and Credit Flashcard Flashcards

Student preview

60 questions

Show all answers

1.

FLASHCARD QUESTION

Front

What is the main difference between a secured loan and an unsecured loan?

Back

A secured loan is protected by collateral, while an unsecured loan is not.

2.

FLASHCARD QUESTION

Front

What is a co-signer and what is the risk of being one?

Back

A co-signer is someone who helps you get a loan by guaranteeing the loan. The risk is that your credit score can be affected if the borrower defaults on the loan.

3.

FLASHCARD QUESTION

Front

What is the difference between a fixed interest rate and a variable interest rate?

Back

A fixed interest rate stays the same throughout the loan term, while a variable interest rate can change.

4.

FLASHCARD QUESTION

Front

What is the main reason why the speaker says payday loans are "kind of the worst"?

Back

Payday loans have very high interest rates.

5.

FLASHCARD QUESTION

Front

What is a good example of collateral for a secured loan?

Back

A car.

6.

FLASHCARD QUESTION

Front

What is the main benefit of having a good credit score?

Back

You can get a lower interest rate on a loan.

7.

FLASHCARD QUESTION

Front

What are the three major credit agencies that maintain credit reports?

Back

Experian, Transunion, and Equifax

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