REVIEW-U3-Credit

Basics of Credit

1. Loans allow people to money now and pay it back later.

2. A loan used to purchase a vehicle is called an loan.

3. With Buy Now Pay Later (BNPL), purchases are split into smaller .

4. Credit cards charge if the balance is not paid in full each month.

5. A loan used to buy a house is called a .

6. Payday loans should be avoided because they have extremely high .

7. A secured credit card requires a deposit that acts as your credit limit.

Parts of a Loan

8. The is the amount of money you borrow.

9. The is the length of time you have to repay the loan.

10. The rate is the percentage charged for borrowing money.

Secured vs. Unsecured Loans

11. A loan backed by collateral is called a loan.

12. A loan with no collateral is called an loan.

13. Missing payments on a secured loan can result in of the asset.

14. Missing payments on an unsecured loan damages your score.

Fixed vs. Variable Rates & APR

15. A rate stays the same for the life of the loan.

16. A rate can change over time.

17. APR stands for .

18. APR includes interest plus .

Installment vs. Revolving Credit

19. Credit cards are an example of credit.

20. Car loans and mortgages are examples of loans.

Wealth & Net Worth

21. Being means having a high income right now.

22. Being means having long-term financial security.

23. Net worth equals what you minus what you .

24. Assets are things you that have value.

25. Liabilities are you owe.

Debt & Net Worth

26. Student loans and mortgages are often considered debt.

27. Credit card debt, car loans and payday loans are considered debt.

The 3 C’s of Credit

28. asks if you can afford to repay the loan.

29. looks at whether you will repay based on your history.

30. refers to collateral or what the lender can take if you don’t pay.

Credit Reports & Scores

31. Credit reports are created by three major credit .

32. A common credit score used by lenders is the score.

33. Credit scores range from to .

34. A credit score between 800–850 is considered .

35. Errors on a credit report must be in writing.

What Affects Your Credit Score

36. The most important factor in your credit score is history.

37. Credit utilization should generally stay under percent.

38. Credit utilization is calculated by dividing balances by total limits.

Why Credit Matters

39. Landlords may check your credit before approving an lease.

40. Poor credit can require higher deposits for utilities.

41. People with higher credit scores often pay lower premiums.

Building Credit

42. It takes about months to establish your first credit score.

43. Becoming an user can help you build credit safely.

44. Making payments is the most important habit for building credit.

Credit Cards

45. A credit card provides a line of .

46. Paying the balance avoids interest.

47. Paying only the payment is the most expensive option.

48. The legally required box that summarizes credit card terms is the Box.

Loans & Amortization

49. Amortization means paying a loan with monthly payments.

50. Early in an amortized loan, most of the payment goes toward .

51. Paying extra early reduces the total paid over time.

Auto Loans & Cars

52. The loss of value over time is called .

53. A new car can lose % of its value in the first year.

54. The lender owns the car until the loan is fully .

55. Leasing means paying for the car’s without owning it.

Debt Management

56. Ignoring debt can lead to fees, collections, and action.

57. Wage allows creditors to take money directly from your paycheck.

58. The Snowball Method focuses on paying off the debt first.

59. The Avalanche Method focuses on paying off the debt with the rate.

60. Consolidation: combines multiple debts into one with one payment.