Section 5 Study Questions (9.0 points)
Answer each question fully. Complete sentences are not necessary.
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
2. What is a credit score? (0.5 points)
Your credit score 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)
Inquires is one section of a credit report
Lesson 2 (3.0 points)
1. Name at least one of the steps in establishing credit. (0.5 points)
Open 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)
Co-signing is a way to take advantage of someone else's credit history in order to get a credit card.
3. What is debt services default? (0.5 points)
Debt services default is the failure to make a payment, such as a scheduled mortgage payment or the finance charge on a credit card.
4. What is the Better Business Bureau? (0.5 points)
5. What is a debt settlement program? (0.5 points)
Debt settlement programs are programs that claim they can get you out of debt by negotiating your debt to a much lower amount and working out a payment plan with your creditors.
6. What is bankruptcy? (0.5 points)
Bankruptcy is the inability to pay back your creditors, to the extent that...