Study Guide: Credit Cards and Other Forms of Credit

What are some advantages of using Credit?

• You have the ability to have something right now that you can't fully pay for yet.

• The primary one is building a great credit score.

What are some disadvantages of using Credit?

• You pay interest every month you maintain a balance.

• It can become tempting to spend more money than you have and can afford, which can result in devastation.

Without a good credit score, you will have higher interest rates.

• True

• False

What is the scale used for Credit Score?

(a)  

What Credit Score Range would be considered Super Prime?

• 300-499

• 500-599

• 600-699

• 700-850

Define Credit

• money that a lender makes available to a borrower with the understanding that the borrower will repay the money in the future.

• a type of investment in stocks and bonds.

• a form of currency used in digital transactions.

• a government grant for education.

Define Credit Score

• A numeric score that uses your credit history to assess your creditworthiness.

• A measure of your annual income.

• A score that determines your eligibility for government benefits.

• A rating of your driving skills.

Define Interest

• Fees charged by a lender on borrowed money.

• A type of insurance policy.

• A method of saving money.

• A government tax on income.

Define Credit Card

• Provides individuals with revolving open-ended credit, which can be drawn from repeatedly up to a preset limit.

• A type of savings account with a fixed interest rate.

• A loan that must be repaid in fixed monthly installments.

• A financial instrument used to invest in the stock market.

Define Credit Provider

• Financial institution, such as banks, that agree to make a certain amount of credit available.

• A company that provides internet services.

• An organization that offers educational courses.

• A retailer that sells consumer electronics.