Managing Credit

These flashcards cover fundamental concepts related to managing credit, including borrowing, lending, interest rates, and credit scores, as discussed in the lecture notes.

When borrowing $100, the lender charges __, causing the borrower to repay more than $100.

Interest.

Businesses and individuals lend money to earn __, allowing them to make a profit.

Interest.

People often use credit to purchase cars, homes, college education, __, electronics, and more.

Furniture and appliances.

Using credit can help manage cash flow, handle emergencies, and __ payments over time.

Spread.

A person may prefer lending to someone they trust due to factors like reliability and __ behavior.

Past repayment.

People hesitate to lend to someone with a poor repayment history due to increased risk of __.

Loss.

Common institutions offering consumer credit include banks, credit unions, and __.

Credit card companies.

Lenders differ in credit types, interest rates (fixed vs. variable), and __.

Fees.

Interest rates are influenced by economic factors such as inflation and central bank __.

Policies.

Lenders advertise loan costs by showing the Annual Percentage Rate (APR) and __.

Monthly payments.

If a borrower misses a payment, low introductory rates can increase to the __ rate.

Regular.

Higher interest rates and longer loan terms will __ the total cost of the loan.

Increase.

Credit cards often have higher rates because they are __ loans.

Unsecured.

To minimize credit card interest, it's advised to pay the full balance each __.

Month.

Credit reports include personal information, credit accounts, payment history, and __.

Public records.

A strong credit history results in lower interest rates and better borrowing __.

Terms.

Education and housing credit allows investment in long-term assets that appreciate in value and increase __ potential.

Earning.

Indicators of too much debt include spending most of monthly income on debt and frequently missing __.

Payments.

Consequences of excessive debt may include increased interest costs and financial __.

Stress.

A grace period is a time frame allowing payment in full without paying __.

Interest.

Secured loans have lower rates because they are backed by __.

Collateral.

The collateral for a mortgage is the __ itself.

Home.

Sources of funding for education include scholarships, federal student loans, and __ loans.

Private.

FAFSA determines eligibility for federal grants, loans, and __ programs.

Work-study.

The primary organizations for credit reporting are Experian, Equifax, and __.

TransUnion.

Factors in credit score calculations include payment history and amounts owed or __.

Credit utilization.

Higher credit scores lead to lower interest rates and better __ approvals.

Loan.

Landlords use credit scores to evaluate __ applications.

Rental.

A good credit score can lead to lower interest rates and higher __ limits.

Credit.

Soft inquiries do not affect credit scores, while hard inquiries can lower scores __.

Slightly.

Failing to repay loans can lead to a lower credit score and increased __ rates.

Interest.

Organizations that help with credit counseling may be non-profit or __.

For-profit.

Bankruptcy laws provide legal relief to individuals unable to repay debts while ensuring fair treatment of __.

Creditors.

Liquidation involves selling assets to pay __; debt is discharged.

Creditors.

The Truth in Lending Act (TILA) requires lenders to provide clear information about __ rates and loan terms.

Interest.

Alternative financial services include payday loans, rent-to-own agreements, and __ services.

Check-cashing.

Payday loan debt cycles can occur due to high interest and fees requiring additional loans to cover the __ loan.

Original.