Unit 2 Ch. 3 Review

The ability to borrow money or access goods or services with the understanding that you'll pay later

• Credit

• Debt

• Creditor

• Credit Report

Lenders, merchants and service providers who grant credit based on their confidence you can be trusted to pay back what you borrowed, along with any finance charges that may apply

• Loan

• Debt

• Creditor

• Credit

The money you owe to creditors

• Interest

• Debt

• Principal

• Credit

The money charged for borrowing

• Credit

• Loan

• Interest

• Principal

The initial size of a loan

• Principal

• Debt

• Interest

• Credit

Items and services are paid for in a single payment, within a given time period, after the purchase; Interest is usually not charged

• Installment Credit

• Revolving Credit

• Single Payment Credit

Merchandise and services are paid for in two or more regularly scheduled payments of a set amount; interest is included

• Revolving Credit

• Installment Credit

• Single Payment Credit

Many items can be bought using this plan as long as the total amount does not go over the credit user’s assigned dollar limit

• Revolving Credit

• Installment Credit

• Single Payment Credit

a complex mathematic formula that takes into account your payment history on previous loans, the length of your credit history (how long you’ve had accounts open), any outstanding debt that you owe, your current salary, and the amount of recently opened accounts

• Credit History

• Loans

• Debt

• Credit Score

Character, one of the three C's of Creditworthiness, asks this question:

• Will you repay the debt?

• What if you don't repay the debt?

• Can you repay the debt?