Credit Card and Student Loans

Question 1

Components of FICO

Answer 1

1. Debt repayment history,
2. debt owned
   3.how long you’ve been in debt
3. new debt, types of debt.

• NOT BASED ON HOW MUCH MONEY YOU ACTUALLY HAVE

Question 2

What does it mean to have a high and low FICO Score

Answer 2

If you have a high FICO score, you’ve been in debt and managing it well
If you have a low FICO score, you’ve been missing payments, filed bankruptcy, And have been in debt for a long time.

Question 3

Credit Bureau services

Answer 3

They compile credit reports on individuals, which they sell to prospective lenders and others. The three bureaus can have somewhat different information in their reports, depending on which creditors provide it to them. The information in your credit reports is also used to assign credit scores to you.

Question 4

For a debit card, where is the source of the money?

Answer 4

Your bank account

Question 5

For a credit card, where is the source of the money

Answer 5

An issuer or bank

Question 6

How do credit card companies make their money

Answer 6

By persuading you to pay a minimum payment instead of your statement balance, because you end up having to pay an APR on the remaining balance that was due.

Question 7

What are some documents that you need to file the FASFA

Answer 7

W2, pay stubs, tax return

Question 8

What is the difference between a subsidized and unsubsidized loan

Answer 8

Subdisidzed is a loan that does not accrue interest right away, usually happens after you graduate. An unsubsidized loan accrues interest immediately.

Question 9

Amortization

Answer 9

The action or process of gradually writing off the initial cost of an asset by a specific date. In amortization, interest gets paid off first and then the principle because issuer of the loan wants their fees paid off first.

Question 10

3 responsibilities of a credit bureau

Answer 10

1. They give you the borrower, an idea about how you manage debt
2. Give the issuer (a bank) an idea about how you manage debt
3. Provide security protection (prevent someone from stealing your information)

Question 11

What do credit bureaus do?

Answer 11

Report your credit score, (Three agencies)

Question 12

What does credit mean denotatively?

Answer 12

Credo: I believe, The belief that someone will pay you back

Question 13

What is A Credit

Answer 13

Money you’ve already paid

Question 14

Credit card

Answer 14

Chainsaw of personal finance; can be helpful and beneficial but can cause irreversible damage

Question 15

Cash advance

Answer 15

The act of withdrawing cash against your credit limit through the use of your credit card, should be done for emergencies because there are very high fees and APRs

Question 16

APR

Answer 16

(Annual percentage rate):Interest rate cost of not using your credit card appropriately. You will not be charged APR until you miss the grace period of paying your statement// usually 24%

Question 17

Statement

Answer 17

Credit card bill that has a due date and lists your transactions and credits within a certain time frame.

Question 18

Grace period

Answer 18

period of 10-12 days where you have time to accrue funds to pay your statement

Question 19

Penalties with credit cards

Answer 19

you are only penalized if you make the minimum payment

Question 20

Pay the minimum?

Answer 20

RED: a payment assigned by the issuer that is lower than the statement, yet you are penalized by having to pay an APR on your remaining due balance.

Question 21

Pay the statement?

Answer 21

YELLOW: When you pay the balance of your billing cycle, no penalties and no credits

Question 22

Pay the current balance?

Answer 22

Green: Pay all balances up to date, present. Doing this gets you credits for the next billing cycle.

Question 23

Unsecured loan

Answer 23

No collateral, credit card loans are unsecured loans.

Question 24

Private funding

Answer 24

Type of loan that comes from a private institution. Your credit score must be at least 690 to qualify.
- Average interest rate is 6%-13%

Question 25

FICO is about managing ____ not measuring your ____

Answer 25

debt, income or how much money you have

Question 26

Manual underwriting

Answer 26

The process where the bank or loan originators collects documents such as bills, paystubs, or Tex returns, to determine loan worthiness.

Question 27

FASFA

Answer 27

(Free Application for Federal Student Aid): determines eligibility for federal grants, work-study, and federal loans. [also some scholarship committees]

Question 28

Subsidized Loan

Answer 28

interest accrues after graduation, usually six months

Question 29

Unsubsidized loans

Answer 29

interest accrues immediately

Question 30

Grant

Answer 30

Money given by the federal government that does not have to be repaid

Question 31

Direct Plus Loans

Answer 31

Unsubsidized loan that parents or grad students can take out.

Question 32

Work study

Answer 32

Part-time job awarded by college

Question 33

Describe why someone may owe more than they originally borrowed after paying the minimum payment on a loan for 10 years

Answer 33

Some individuals who are under an income based repayment plan have lower monthly payments that don’t contribute to the principle or interest payments. The balance increases over time.

Question 34

Three ways to spend from your bank account

Answer 34

Cash, check, debit

Question 35

Understand the source of money for bank accounts

Answer 35

Labour accrues money into your bank account, spend using cash, check, debit. All money spent is 100% paid.

Question 36

Revolving loan

Answer 36

A revolving loan occurs when a lender grants a borrower money up to an approved limit. A credit is a revolving loan

Question 37

What is the source of money for credit cards?

Answer 37

Card issuer or bank.

Question 38

What does a purchase read as on credit statement

Answer 38

transaction

Question 39

What does a payment read as on credit statement

Answer 39

credit

Question 40

Pros and Cons of having a credit card?

Answer 40

Pros: convenience, rewards/cash back
Cons: high interest rates fees

Question 41

Pros and Cons of having a credit card?

Answer 41

Pros: convenience, rewards/cash back
Cons: high interest rates fees