Assignment 5: Credit and Loans
1. If you are borrowing money and paying interest, would you prefer an interest rate that compounds annually, quarterly, or daily? Why? (2-4 sentences. 1.0 points)
If i was borrowing money and paying interest i would prefer that the interest rate was annually. Annually means yearly which means i would only have to pay interest that one time. It might be an expensive amount of money to come up with but at least it’s paid off and you no longer have to deal with it.
2. In your Section_5 folder, navigate to and open the Example_Credit_Report, and then answer the questions below.
a. What is the total balance of Jessie Robinson's real estate account? (0.5 points)
b. What is the total balance of Jessie Robinson's revolving account? (0.5 points)
c. Has Jessie Robinson ever applied for bankruptcy? (0.5 points)
d. How many creditors have made inquiries about Jessie Robinson's credit? (0.5 points)
e. Do you think Jessie Robinson usually pays bills on time and in full? (1-2 sentences. 1.0 points)
I do believe that Jessie Robinson pays his bills on time and in full.
f. Do you think Jessie Robinson's credit score would be great, normal, or poor? Why? (1-3 sentences. 1.0 points)
I think that Jessie Robinson’s credit score would either be normal or great because to me it looks as if he always pays his bills on time and has never filed for bankruptcy.
3. Describe a real or made up but realistic situation in which you would want to use installment credit. (2-4 sentences. 1.0 points)
If a buyer wants to buy regularly from a particular seller against Letter of Credit, instead of opening letter of credit on each transaction the buyer can open one revolving letter of credit. Under this scheme when one consignment is paid, the letter of credit is automatically available for the next consignment.
4. Describe a real or made up but realistic situation in which you would want to use non installment credit. (2-4 sentences. 1.0 points)
You would want to use non installment credit when purchasing something such as a car or a home. This has rates & fees charged up front and its for a concrete amount to be paid back within a term, or length of time.
5. Describe a real or made up but realistic situation in which you would want to use revolving credit. (2-4 sentences. 1.0 point)
You would use revolving credit for stuff such as groceries or gas. This line of credit allows an authorized amount to be charged in a month, or billing cycle.Payments are expected every month.
6. If you had no credit history yet but wanted to establish one, describe what you could do in order to establish a credit history. (3-6 sentences. 2.0 points)
If you have no credit history you may want to get a credit card from a specialized lender that caters for those with poor (or no) credit history. These tend to have higher percentage rates and low credit limits, but if you use this sensibly and don't make late payments you will establish a regular history of good credit use and your score will increase.
7. Describe two things you can do to make sure you use credit responsibly. Explain why these things are important. (2-4 sentences. 2.0 points)
Two things you can do to make sure you use credit responsibly are: 1. Make sure to pay(in full) your credit card and other bills on time. 2. Make sure not to go over the balance that is in your account. If you do not ever overdraft it will look better on your records in the long run.
8. If you were old enough to get a credit card but unable to get one because you didn't have enough of a credit history, which of the alternate options for establishing credit would you prefer to use? Why? (2-4 sentences. 1.0 points)
If you are old enough for a credit card but are unable to get one because you have no credit you should open a checking account and then go to a...
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