Managing Credit

What is debt?

• Debt is money that is earned.
• Debt is a form of savings.
• Debt is a type of investment.
• Debt is money that is owed or due.

A debt-management strategy where you pay off debt in order of smallest balance to largest balance, gaining momentum as you knock out each balance

• Low-Rate Method

• Snowball Method

• Avalanche Method

• High-Rate Method

A debt-management strategy where you pay off your balance with the highest interest rate first, followed by your next-highest interest rate and so on.

• Low-Rate Method

• Snowball Method

• Avalanche Method

• High-Rate Method

What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time?

• Snowball method
• Make minimum payments
• High rate method
• Consolidate multiple debts into one new loan

What is the benefit of the Snowball Method?

• Provides motivation by allowing individuals to pay off smaller debts first, leading to a sense of accomplishment.

• It helps individuals save money by investing in high-interest accounts.
• The method encourages taking on more debt to improve credit scores.
• It focuses on paying off the largest debts first for quicker results.

What is a credit report?

• Asummary of an individual's bank account balance.

• A detailed record of an individual's credit history.

• Alist of all the loans a person has taken out.

• Adocument that shows a person's employment history.

Why would a lender (someone who is going to lend you money) want to look at your credit report?

• To check your income level and employment history.
• To verify your identity and personal information.
• To determine your spending habits and lifestyle choices.
• To assess your creditworthiness and determine the risk of lending you money.

What is included in your credit report?

• Personal information

• Credit accounts & payment history

• Credit inquiries

• All of these

Why should you review your credit report frequently?

• To increase your debt load
• To apply for new credit cards
• To ignore payment history
• To identify errors, detect fraud, and maintain a good credit score.

What is a credit score?

• A credit score is a measure of a person's income level.
• A credit score is a grade for a person's creditworthiness.

• A credit score is a type of bank account.
• A credit score is a rating of a person's physical health.