Section 5 Study Questions (9.0 points)
Lesson 1 (3.0 points)
1. What is credit? (0.5 points)
A commitment to pay for something in the future, instead of paying for it right away.
2. What is a credit score? (0.5 points)
A number that tells lenders how likely you are to make payments on time.
3. What is installment credit? (0.5 points)
When you borrow a specific amount and agree to pay it in a specific number of payments of equal amounts.
4. What is revolving credit? (0.5 points)
When you are approved for borrowing up to a specific credit limit, and you can choose how much of that credit to use and when to pay it off.
5. What is non-installment credit? (0.5 points)
Credit that is paid all at once, in a single payment.
6. Name at least one section of a credit report. (0.5 points) Public records, which includes court records and other records about you.
Lesson 2 (3.0 points)
1. Name at least one of the steps in establishing credit. (0.5 points) Opening a bank account.
2. Name at least one alternate option to establishing credit if you are unable to get a credit card yet. (0.5 points) Get department store and/or gas cards.
3. What is debt services default? (0.5 points)
The failure to make a payment, such as a scheduled house
payment or the interest on a credit card.
4. What is the Better Business Bureau? (0.5 points)
An organization that reports on the reliability and ethics of companies and other organizations.
5. What is a debt settlement program? (0.5 points)
A program that claims it can get you out of debt by negotiating your debt to a much lower amount and working out a payment plan with your creditors.
6. What is bankruptcy? (0.5 points)
The inability to pay back creditors, to the extent that you file legal papers that put your finances under the supervision of the court system.
Lesson 3 (3.0 points)
1. What is an annual percentage rate? (0.5 points)
An annual interest rate that...