Credit Basics

Which of the following statements best explains the purpose of a Schumer box?

• Gives the lender a clear report of your credit history and creditworthiness for a new card

• Calculates the total interest you will be charged on your previous month's purchases

• Gives the borrower a clear description of the APR, fees, and other major conditions of their credit card

• Provides a list of all purchases made on a credit card and the price of each item, for the benefit of the lender and the borrower

Allowing goods and services to be used now with a promise of payment in the future.

• credit
• bankruptcy
• debtor
• foreclosure

How do you ruin your credit?

• Have someone Co-Sign your loan
• Not pay your bills
• Get a gas/Apartment card
• Cats

Which of the following means that someone is willing to loan you money; you are using their money?

• Interest

• Capital

• Credit

• Loan term

All of the following are examples of benefits of credit, EXCEPT:

• Increase your standards of living
• Safer than cash
• Buying power
• Can tie up future income

If you take out a $250,000 fixed rate mortgage for 30 years

• The payment amount you owe every month will be the same

• The amount of interest you pay each month will be the same

• The amount of principal you pay each month will be the same

• You will not be allowed to pay more than the amount due every month

This is when the interest rate will remain the same for the life of the loan

• Adjustable rate
• Balloon rate
• Never changing rate
• Fixed rate

The following describes which of the 5 C's of Credit?

Something that the credit company can get from you if you do not pay your loan.

• Collateral

• Condition

• Character

• Capacity

• Capital

Money you pay up front toward the purchase to reduce the loan amount

• Down payment
• Up front payment
• Principal
• Interest

Is the following a good reason to borrow money?

Taking out a $5,000 student loan for college tuition.

• Yes

• No