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
