13 Uses of Credit Flashcards
What is credit?
An arrangement in which there is an exchange of goods, services, or money for a promise to repay at a future date.
Credit can involve various terms and conditions based on the agreement.
What is a credit application?
A form or interview that provides information about your ability and willingness to repay debts.
This application is often reviewed by lenders to assess creditworthiness.
What is a credit bureau?
A firm that collects and keeps records of many borrowers’ credit histories.
Credit bureaus play a crucial role in the credit reporting system.
What is credit card blocking?
A practice that occurs when hotel or other service providers place a hold on a card holder’s account to reflect the anticipated cost of services.
This is often temporary and can impact available credit.
What are credit cards?
Cards that allow repeated use of credit as long as the consumer makes regular monthly payments.
Credit cards typically come with interest rates and various fees.
What is a credit history?
A continuing record of a person’s credit usage and repayment of debts.
This history is crucial for determining creditworthiness.
What is a credit report?
Information compiled by a credit bureau from merchants, utility companies, banks, court records, and creditors about your payment history.
Credit reports are used by lenders to evaluate credit applications.
What is a credit score?
A statistical measure used to rate applicants based on various factors deemed relevant to creditworthiness and the likelihood of repayment.
Credit scores can influence loan terms and approval.
What is a loan?
Consumer credit that is repaid in equal amounts over a set period of time.
Loans can vary in terms of interest rates and repayment schedules.
