Consumer Credit Flashcards
Why do consumers use credit?
Convenience
What makes you more eligible for credit?
Income, debt load, job stability
What is in a credit report?
Personal information, banking information, credit score
What do major credit Bureaus in Canada know about us?
Credit account information, payment history, balance of an account.
Why will you want a positive report?
Lower interests rates, potentially better housing options, access to better credit cards
How is a credit score calculated?
How late your payments were, how much was owed, how recently and often you missed a payment.
What are two habits that will help your credit score?
Review your credit reports, pay on time.
What are two habits that will damage your credit score?
Making a late payment, having a high debt to credit utilization ratio
What is insolvency?
When an individual or company can no longer meet their financial obligations.
What is a Guarantor?
An individual who promises to pay a borrowers debt if the borrower defaults on their obligation
What are the risks of using credit?
High interest rates, debt accumulation, lower credit rating.
Give four examples of credit contracts
Credit cards, loan agreement, instalment plan, line of credit.
Types of information found in a credit contract?
Interest rate, how interest is calculated, default interest rate if you fail to pay, all fees.
Rights of using credit?
Obtaining the good or service immediately / in a timely manner. Privacy
Responsibilities of using credit?
Read the contract, know what the minimum monthly payments are, be aware if interest rate, know what the penalties are
What are the three C’s of credit?
Your Character: determined by credit score and history
Your capacity: based on your income and other financial obligations, will you be able to pay back the loan?
Your collateral: do you have savings or assets that can be claimed if you don’t make your payments?
What’s the difference between good and bad debt?
Good debt is an investment, bad debt makes you lose money with out gaining any back
How long is the interest free period on a credit card purchase?
At least 21 days
How much are the typical annual interest rates?
About 20%
What is the minimum age you get a credit card in Quebec?
18
Security features is a credit card include:
EMV chip: unique code that changes with every transaction, making cloned cards useless to fraudsters, PIN, CVV, transaction limits
