Credit and Debt Review

Front

A three-digit number (ranging from 300-850) based on an individual's credit history

Back

Credit Score

Front

The rate charged for borrowing money, usually expressed as a percent of the amount borrowed. The "extra" amount you pay on a debt.

Back

Interest rate

Front

The amount of money you borrow from a lender, this does not include interest.

Back

Principal

Front

The length of a loan agreement. Ex: Your home mortgage is a 30 year loan

Back

Term

Front

The maximum amount that may be borrowed on a credit card

Back

Credit Limit

Front

Which is more important, to establish a high credit score, or to limit your debt as much as possible/be debt free?

Back

Limit your debt as much as possible/be debt free

Front

This is what we call a loan to buy a house

Back

Mortgage

Front

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

Back

Make on-time payments

Front

Melvin is 17 years old, too young to get his own credit card, but wants to begin establishing a credit score. Which action should he take to meet that goal? Options: Always say "credit" when asked "credit or debit?" at a store, Ask his parents to cosign a credit card or add him as an authorized user on their credit card, Any time he borrows money from a friend or family member, be sure to pay it back promptly, Take out some private student loans, even though he doesn't need them because he has grants and scholarships.

Back

Ask his parents to cosign a credit card or add him as an authorized user on their credit card.

Front

Which of the following statements comparing credit and debit cards is TRUE? Far more businesses accept credit cards than debit cards, Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard, Credit card companies provide you with a monthly statement, while debit cards do not, With debit cards, you spend your own money, but with credit cards, you're getting a loan that you need to pay back later

Back

With debit cards, you spend your own money, but with credit cards, you're getting a loan that you need to pay back later