IBT Chapter 25 Basis of Credit

Credit is based on the creditor’s confidence that the debtor can and will repay the debt.

• True

• False

The federal government uses credit to pay for many of the services and programs it provides to its citizens.

• True

• False

Credit can diminish the growth of an economy. Delaying payment means there is less money for a business to buy more inventory or invest in new supplies and equipment.

• True

• False

Late or missed payments lower a borrower’s credit rating.

• True

• False

Consumer finance companies specialize in loans to people who have excellent credit ratings and, therefore, offer lower interest rates.

• True

• False

Buying on credit does not enables people to establish a credit rating.

• True

• False

Your credit limit is the point where you cannot charge any more.

• True

• False

Singlepurpose cards are also called bank cards because banks issue them.

• True

• False

A person who borrows money is called ________________.

• a creditor.

• a debtor.

• a lender.

• economically disadvantaged.

The fee charged for borrowing money is called ____________.

• a credit index.

• a percentage rate.

• an IOU.

• interest.