WorksheetsChapter 13 - Basics of Borrowing
Total questions: 20
Worksheet time: 15mins
Bankruptcy is a legal status or procedure for an individual or other entity that cannot repay its debts.
True
False
Credit scores are generated by one national credit bureau.
True
False
FICO is an acronym for the Fair Isaac Corporation.
True
False
Assets such as a car or property pledged as security for repayment of a loan is called debt.
True
False
Part 1: True or False? Read the statements below and select T if the statement is true or F if the statement is false. 5. About 70% of all car purchases in the United States involve an auto loan.
True
False
The maximum amount that a person is permitted to owe, determined by how good their credit rating is, is called
Credit
Credit limit
Credit bureau
Closed-end credit
What is considered to be a good credit score?
550
830
300
620
What is a legal action that a creditor can take to collect what is owed to them by withholding a certain amount of your wages to satisfy the debt?
Wage garnishment
Finance charge
Over limit fee
Promissory note
What is in your credit report?
Bill payment history
If you have ever been sued
Where you live
All of the above
What is a series of loan payments that include the principal plus the interest that makes up each payment?
Annual fee
Average daily balance
Amortization schedule
Open-end credit
Define the following: FICO score
Define the following: Loan
An extension of money from one party to another, agreeing that the money will be paid back with interest
A gift of money that does not need to be repaid
A payment made for a service received
A type of insurance policy
Define the following: Over limit fee
The fee charged if a credit card holder charged over the credit limit allowed
A fee for making a late payment on a credit card
A fee for requesting a credit limit increase
A fee for closing a credit card account early
Define the following: Credit
Define the following: Grace period
The period of time to pay off a new balance before finance charges kick in; the standard time is 21 days and usually applies to new purchases only
A fee charged for late payments on a credit card
The minimum amount you must pay each month on your credit card balance
A reward program offered by credit card companies for frequent use
What is the difference between open-end credit and closed-end credit?
Open-end credit involves loans made on a continuous basis as purchases are made. Closed-end credit is an agreement or contract that states the repayment terms, such as the number of payments, the interest rate, and the monthly payment.
Open-end credit is only used for mortgages, while closed-end credit is only used for car loans.
Open-end credit requires a fixed monthly payment, while closed-end credit does not have any repayment terms.
Open-end credit is always interest-free, while closed-end credit always has high interest rates.
What are three pieces that make up a person's credit score?
Payment history, current debt, and recent credit activity.
Annual income, age, and marital status.
Employment history, education level, and address.
Number of dependents, savings account balance, and occupation.
What are two factors to check for when reviewing credit card terms?
Checking for hidden fees and avoiding cards with annual fees.
Looking for cards with the highest interest rates and late payment penalties.
Choosing cards that require a high minimum balance and limited rewards.
Selecting cards that have no customer support and limited acceptance.
What are the five C's of credit?
Character, Capacity, Capital, Collateral, Conditions
Credit, Cash, Collateral, Contract, Conditions
Character, Credit, Capital, Contract, Conditions
Capacity, Cash, Collateral, Contract, Credit
Two tips for improving your credit are:
Pay your bills on time and keep credit card balances low.
Open multiple new credit cards at once and ignore your credit report.
Max out your credit cards and pay only the minimum due.
Close your oldest credit accounts and avoid using credit.
