Credit

Question 1

Financial Literacy

Answer 1

The ability to understand financial concepts and practices.

Question 2

Budget

Answer 2

A financial plan that helps estimate and distribute your expenses based on your income.

Question 3

Income

Answer 3

The financial gain that a person receives.

Question 4

Expense

Answer 4

The money spent on something.

Question 5

50/30/20 Rule

Answer 5

A budget that divides an income into needs, wants, and savings.

Question 6

Types of Expenses

Answer 6

Fixed, variable, Planned, Unplanned.

Question 7

Variable Expenses

Answer 7

Expenses that aren’t fixed and may change. (Groceries, Household Essentials, Utilities, Clothing)

Question 8

Fixed Expenses

Answer 8

Expenses that remain fixed on a regular basis.

Question 9

Planned Expenses

Answer 9

Expenses that you know are coming. (Bills, Insurance, Car Payments, Memberships.)

Question 10

Unplanned Expenses

Answer 10

Expenses that occur unexpectedly. (Emergencies)

Question 11

Emergency Fund

Answer 11

A savings account set aside for unplanned expenses.

Question 12

Paying Yourself First

Answer 12

To create savings goals for future purchases.

Question 13

Per Unit Pricing

Answer 13

A method that shows how much an item costs per ounce, pound, or per item.

Question 14

Debt

Answer 14

A financial liability to return goods or services borrowed, typically with interest.

Question 15

Loan

Answer 15

A type of debt where a lender provides money, which is to be repaid with interest over a specified period of time.

Question 16

Principal

Answer 16

The initial amount of money borrowed from a loan.

Question 17

Interest

Answer 17

The cost of borrowing money, and is a percentage of the principal.

Question 18

Term

Answer 18

The period of time a person is given to repay a loan.

Question 19

Amortization (Am-er-tuh-zey-shuhn)

Answer 19

The process of paying off debt over time with periodic payments of the principal and interest.

Question 20

Collateral

Answer 20

An asset of a borrower that is seized by a lender in the case that the borrower fails to repay a loan. (Only in secured loans)

Question 21

Credit

Answer 21

The ability to receive goods or services before paying for them, with the agreement to pay later.

Question 22

Credit Score

Answer 22

A rating from 300-850 that estimates how likely someone is to repay debt and pay bills.

Question 23

Credit Report

Answer 23

A record of someones history managing and repaying debt.

Question 24

Credit Bureau

Answer 24

A company that collects data based on credit to calculate someones credit score.

Question 25

What’s the lowest and highest credit score?

Answer 25

300 and 850

Question 26

300-579

Answer 26

Poor

Question 27

580-669

Answer 27

Fair

Question 28

670-739

Answer 28

Good

Question 29

740-799

Answer 29

Very good

Question 30

800-850

Answer 30

Excellent

Question 31

Three Major Credit Bureaus

Answer 31

Equifax, Experian, and TransUnion

Question 32

Credit Scoring Companies

Answer 32

A company that uses mathematical formulas to estimate credit scores based on credit reports.

Question 33

Main Credit Scoring Companies

Answer 33

Fico and VantageScore

Question 34

Impacts of Credit

Answer 34

Payment history, Credit utilization, Length of Credit History, Credit mix, and New credit.

Question 35

How do you find credit ultilization?

Answer 35

Divide the total credit owed, by the total credit given, then multiply that number by 100.