Lesson 7 Credit

What is debt?

• Another word for death

• Something, typically money, that is owed or due

• A loan on which you do not have to pay interest

• That which is incurred during childhood and consummated in college

What is a credit card?

• The ace of diamonds

• A large plastic card designed to ruin consumer's finances

• A small plastic card issued by the government attached to a line of credit

• A small plastic card issued by a bank and attached to a line of credit

An amount of credit extended to a borrower is known as a...?

• Line of Extension

• Several dollars lined up in a straight line

• Available Credit

• In the finance world it is referred to as a "long nose"

Revolving credit is...

• 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.

• a type of credit that can be used only once up to a certain limit and must be closed immediately after all payments are due

• a spinning door with money in it

• a round device that holds credit cards and spins, making it easy to shuffle through all your credit cards quickly

Which of the following is not a characteristic of an installment loan?

• repaid over time

• scheduled payments

• accompanied by an interest rate

• also known as a revolving loan

What is a credit score?

• a number between 300 and 850 representing your creditworthiness

• a statistical number that evaluates a consumer's creditworthiness and is based on credit history.

• Often referred to as a FICO score

• All of the above

What is an interest rate?

• it is your level of interest about a certain topic expressed as a percentage of your total interest

• The amount in terms of dollars that you have to pay back on a purchase

• it is the rate at which your interest in something expires. The higher the number, the quicker your interest expires

• The amount in terms of a rate or percentage that you have to pay back on an amount borrowed

What is a credit report?

• 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

• A detailed report of a bank's credit history prepared by a credit expert and used by consumers in determining a bank's creditworthiness

• A report which shows which credit cards are better than others

• A report invented by Allan Greenspan and credited to Al Gore

The process of collecting funds that are owed and past due is called...

• gathering

• dollar collecting

• overdrafting

• collections

What are the qualities of a charge-off account

• the declaration by a creditor (usually a credit card) that an amount of debt is unlikely to be collected

• the point at which a financial institution reports poor credit performance to a credit bureau

• the point at which an account that has not been paid has a negative impact on your credit score

• all of the above