Unit 3: Credit Study Guide

What does 'character' refer to in credit?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• An item of value pledged to secure a loan

• A fixed interest rate on a house loan

What does 'capacity' refer to in credit?

• A person's trustworthiness and financial responsibility

• An item of value pledged to secure a loan

• Having a stable job, income, etc.

What is collateral?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• An item of value pledged to secure a loan

• A fixed interest rate on a house loan

What is a fixed mortgage?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• An item of value pledged to secure a loan

• A fixed interest rate on a house loan

What is an adjustable-rate mortgage?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• An item of value pledged to secure a loan

• A fixed interest rate for a few years, after which time interest rates fluctuate according to general market conditions

What is garnishment?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• Seizing of property

• A person who adds their information to a loan application and pledges to pay back the loan if you're unable to

What is a co-signer?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• An item of value pledged to secure a loan

• A person who adds their information to a loan application and pledges to pay back the loan if you're unable to

What is a down payment?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• A large sum of money when taking out a mortgage or auto loan so that the principal is smaller

• A fixed interest rate on a house loan

What is principal?

• A person's trustworthiness and financial responsibility

• The increased likelihood of obtaining credit

• An item of value pledged to secure a loan

• The loan amount

What are secured loans?

• Loans that require collateral

• Loans that require proof of employment but not a credit check

• Loans that have very high interest rates and predatory lending

• Loans that require a large down payment