Acct. Credit Test Flashcards
A decrease or loss in value
depreciation
A detailed report of an individual’s credit history
Credit report
time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or negotiated for another term
loan term
type of card issued by a bank that allows users to finance a purchase
Credit card
A measure of an individual’s credit risk; calculated from a credit report using a standardize formula
Credit score
A yearly fee that’s charged by the credit card company for the convenience of the credit card
annual fee
preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimal payments are made to all debts except for the smallest, which is attacked with the largest possible payments
debt snowball
True or False: You must establish credit in order to buy a house.
false
True or False: If you are you victim of identity theft you are only responsible for paying back half of the debt.
false
Which of the following is not a factor in determining a FICO score?
paying cash for all purchases
Which of the following is not a good idea for getting out of debt?
borrow money from your parents to pay off the debt
Which of the following things cannot be done with a debit card but can be done with a credit card?
go into debt
What mortgage is the best mortgage to have?
15 year fixed mortgage
Why is an adjustable rate mortgage a bad idea?
The interest rate changes based on the market conditions; your payment can become too much to pay quickly
Explain why financing a car is a bad idea.
you will have payments you will need to pay interest and it depreciates overtime
Describe the negative consequences of taking on debt. What effect can debt have on your future?
for as long as you owe people money you can’t pay yourself = can’t save, invest, or build wealth
What are some things you can do to protect your personal information?
use a paper shredder for destroying things that use personal information, keep passwords and personal information confidential, and create strong passwords
…is given to borrowers based on their financial resources or ability to repay the loan; the lender does not have rights to a specific asset if the loan is not repaid
unsecured loan
… is usually needed when borrowing large amounts of money; if you default on the loan and your house was used as collateral, the lender would take your house
secured loan
modern day loan sharks who take advantage of people and should be avoided at all costs
predatory lenders
Know these four things:
Pay payday loans are expensive, you can get stuck in a repeat cycle, debt grows fast at these rates, and many companies have unethical debt collection practices
A mortgage with an interest rate of that changes based on market conditions
adjustable rate mortgage
when a homeowner borrows against the equity in their home and obtains monthly, tax-free payments from the lender
reverse mortgages
process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time is stipulated in the mortgage contract
foreclosure
