What is Credit?

Topics: Credit, Loan, Debt Pages: 2 (442 words) Published: May 29, 2014
Section 5 Study Questions (9.0 points)
Answer each question fully. Complete sentences are not necessary. Lesson 1 (3.0 points)
1. What is credit? (0.5 points)
the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. 2. What is a credit score? (0.5 points)
is a three digit number calculated from your data-rich credit report and is one factor used by lenders to determine your creditworthiness for a mortgage, loan or credit card 3. What is installment credit? (0.5 points)

is a type of credit that has a fixed number of payments, in contrast to revolving credit. 4. What is revolving credit? (0.5 points)
credit that is automatically renewed as debts are paid off
5. What is noninstallment credit? (0.5 points)
Installment loans include (1) automobile loans, (2) loans for other consumer goods, (3) home repair and modernization loans, (4) personal loans, and (5) credit card purchases 6. Name at least one section of a credit report. (0.5 points) Your name and variations

Lesson 2 (3.0 points)
1. Name at least one of the steps in establishing credit. (0.5 points)

2. Name at least one alternate option to establishing credit if you are unable to get a credit card yet. (0.5 points) Another avenue for establishing credit is a secured credit card 3. What is debt services default? (0.5 points)

can be of two types: debt services default and technical default. Debt service default occurs when the borrower has not made a scheduled payment of interest or principal 4. What is the Better Business Bureau? (0.5 points)

is a nonprofit organization focused on advancing marketplace trust 5. What is a debt settlement program? (0.5 points)
programs typically are offered by for-profit companies, and involve the company negotiating with your creditors to allow you to pay a “settlement” to resolve your debt 6. What is bankruptcy? (0.5 points)

the state of being completely lacking in a particular...
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