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Using Credit
Personal finance
| term and definition | lists |
|---|---|
| Credit | The ability to borrow money from someone else with the agreement to pay it back. |
| Creditors | Also known as lenders persons businesses and service providers. |
| A Debtor | A person who borrows money from others and the money borrowed is called debt must be repayed. |
| Income | money received especially regularly for work or through investments. |
| Capital | The form of money or other assets owned by a person after deducting your debts. |
| Revolving Credit | Credit that you can borrow on the ongoing basis it has interest rates. |
| Charge cards | only can be used at certain businesses allow to make purchases without drawing money. |
| Open credit | the type of credit requires full payment for each period such as per month. |
| Installment Credit | a loan with a specific sum of money you agree to repay in a set period of time. |
| A loan | when money is given to another party to repay the prinicpal loan amount plus interest. |
| Rewards | this is where you can earn cash or points back from the money you spend on your card that can be used for future purchases. |
| Interest | this is the amount of money the credit card company will charge you unless you pay off your balance each month. |
| Annual Percentage Rates (APR) | refers to the yearly interest rate on a card. can be a fixed rate which means it should change but some are variable rates which means it could change over time and this is something to be aware of. |
| A credit score | A number ranging from 300 - 850 that represents your credit worthiness. |
| Grace period | A set amount of time payment can be delayed without penalty. |
| Incentive Buying | A premium offered such as a gift discount or merchandise in hopes of encouraging purchases. |
| Credit Reports | This report about your credit activity and credit situation such as a loan history and status credit. |
| Credit Statements | A summary of your credit card activity bills and additional information. |
| Title Transfer | A change in ownership over goods or property a famous title transfer example is a car. |
| Co - signing | A joint signing of a loan or lease with another person to guarantee payment. |
| Foreclosure | A legal process in which a lender repossesses and attempts to sell a borrowers property when they fail to make their payments. |
| Bankruptcy | A legal proceeding involving a person or business that cannot repay all its outstanding debts. |
| Collareral | Possessions they will take if you owe debt. |
| Credit Ratings | this is a rating assessment based on your credit worthiness to pay back debt. |
| It would be best if you considered the following when deciding on using credit | Income and capital wealth |
| 5 advantages of credit | 1. Purchase power 2. financing 3. emergencies 4. safety 5. helps build your credit score |
| 4 disadvantages of credit | 1. overspending 2. opportunity cost of credit decisions 3. fees and finance charges 4. I identity theft |
| 4 types of credit | 1. revolving credit 2. charge cards 3. open credit 4. installment credit |
| once you have a credit card you need to do the following | 1. know your credit card limits 2. make reasonable purchases with your card that can quickly pay off on time. 3. make your monthly credit card payments. |
| why do you want to have a good credit history | 1. it will help you have a good credit score. 2. allows banks to see your ability to pay debt off and how responsible you are for future credit. 3. at your age this might not seem huge this can affect your future getting a loan. |
| how do you get a credit card or loan. | 1. make a list 2. check your credit score 3. research 4. shop around 5. compare your top choices 6. read the fine print 7. apply online or in your bank |
| what are the two popular factors in why someone chooses a credit card | 1. rewards 2. interest |
| why does a credit score matter | 1. it can help apply for loans such as houses or cars health insurance and can help you get a large credit amount. 2. a bad credit rating cause increases the cost of using credit. |
| how to establish a good credit score | 1. get a credit card and be sure to make payments on time be sure to use it often but make sure you can pay your bills 2. open and maintain a checking or savings account. 3. don't apply for too many credit cards having to much debt can be a problem. |
| what are 4 tips for a credit score | 1. review your statements monthly 2. set reminders to make payments. 3. check your score often. 4. be in contact with the bank if you ever have questions or concerns. |
| what are 7 tips on how to repair credit score. | 1. check and fix any errors in your credit report. 2. start paying bills on time. 3. pay down other debts. 4. up your credit line. 5. keep old credit cards open 6. don't take out credit unless you need it. 7. work with a credit repair company. |
| give 9 strategies for effective debt management 1- 5 | 1. have a payment strategy 2. always know what you owe. 3. make your minumiun monthly payments. 4. check your accounts often 5. have a priority list of which debt to pay off 1st |
| 6 - 9 | 6. have an emergency fund to have access to if need be. 7. check your credit report. 8. look for opportunities to consolidate 9. get professional assistance when you need help or have questions |
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