Personal Finance Study Questions 5

Lesson 1 (3.0 points)

1. What is credit? (0.5 points)

Credit is a commitment to pay for something in the future, instead of paying for it right away

2. What is a credit score? (0.5 points)

Your credit score or is a number that tells lenders how likely you are to make payments on time.

3. What is installment credit? (0.5 points)

Installment credit is when you borrow a specific amount and agree to pay it in a specific number of payments of equal amounts.

4. What is revolving credit? (0.5 points)

Revolving credit is when you are approved for borrowing up to a specific credit limit, and you can choose how much of that credit to use and when to pay it off.

5. What is noninstallment credit? (0.5 points)

Noninstallment credit is credit that is paid all at once, in a single payment

6. Name at least one section of a credit report. (0.5 points)

Credit history

Lesson 2 (3.0 points)

1. Name at least one of the steps in establishing credit. (0.5 points)

Opening up a bank account.

2. Name at least one alternate option to establishing credit if you are unable to get a credit card yet. (0.5 points)

Gas cards

3. What is debt services default? (0.5 points)

The failure to make a payment.

4. What is the Better Business Bureau? (0.5 points)

An organization that reports on the reliability and ethics of companies and other organizations.

5. What is a debt settlement program? (0.5 points)

A program that claims they can get you out of debt by negotiating your debt at much lower amounts and works out a payment plan with your creditors.

6. What is bankruptcy? (0.5 points)

Bankruptcy is the inability to pay back your creditors.

Lesson 3 (3.0 points)

1. What is an annual percentage rate? (0.5 points)

An annual interest rate that doesn't take into account any compounding of interest that happens during that year.

2.