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Personal Credit & Loans Flashcards

Personal Credit & Loans Flashcards
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5 C's of Credit: Conditions
When considering this aspect of good credit, a lender looks at the economic environment and the terms of credit.
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Debt
This is what credit financing becomes once you use it to purchase something.
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Consequences associated with responsible use of credit
If you use credit in this way then lenders are more likely to offer you credit when you request it in the future.
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Consequences associated with irresponsible use of credit

Damage to an individual's financial reputation with misuse

Potential to overuse

Higher than normal rates of interest

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Disadvantages associated with using credit
Using this can be disadvantageous to you as you will be subject to interest rates.
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Revolving Credit
You use this type of credit when you make charges on your credit cards. It allows you to make purchases at will as long as you're making payments on an agreed schedule.
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Installment Credit
This type of credit allows you to use money for specific purchases. Examples can include loans for homes, cars or school.
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5 C's of Credit: Character
Assessing this aspect of good credit involves looking at how long an individual has been working and the person's bill-paying record.
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5 C's of Credit: Collateral
This aspect of good credit deals with a tangible object that a borrower can give to a lender if the borrower were to default.
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5 C's of Credit: Capacity
A part of good credit that takes into consideration an individual's expenses and income
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Non-Installment Credit
A type of credit that will require you to quickly pay back funds in a lump sum, typically without charging interest. Examples include same as cash offers, usually offered for 30, 60 or 90 days.
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22 cards in set

Flashcard Content Overview

Working with these flashcards can help you go over various kinds of credit, including installment credit, non-installment credit and revolving credit. You can also look at loans, including personal loans and unsecured loans. The 5 C's of credit will be covered by these cards, along with the components that make up your credit score. Additionally, you can find cards that deal with the outcomes of responsible and irresponsible use of credit.

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Back
Non-Installment Credit
A type of credit that will require you to quickly pay back funds in a lump sum, typically without charging interest. Examples include same as cash offers, usually offered for 30, 60 or 90 days.
5 C's of Credit: Capacity
A part of good credit that takes into consideration an individual's expenses and income
5 C's of Credit: Collateral
This aspect of good credit deals with a tangible object that a borrower can give to a lender if the borrower were to default.
5 C's of Credit: Character
Assessing this aspect of good credit involves looking at how long an individual has been working and the person's bill-paying record.
Installment Credit
This type of credit allows you to use money for specific purchases. Examples can include loans for homes, cars or school.
Revolving Credit
You use this type of credit when you make charges on your credit cards. It allows you to make purchases at will as long as you're making payments on an agreed schedule.
Disadvantages associated with using credit
Using this can be disadvantageous to you as you will be subject to interest rates.
Consequences associated with irresponsible use of credit

Damage to an individual's financial reputation with misuse

Potential to overuse

Higher than normal rates of interest

Consequences associated with responsible use of credit
If you use credit in this way then lenders are more likely to offer you credit when you request it in the future.
Debt
This is what credit financing becomes once you use it to purchase something.
5 C's of Credit: Conditions
When considering this aspect of good credit, a lender looks at the economic environment and the terms of credit.
5 C's of Credit: Capital
Lenders consider this factor of credit to be a down payment. When buyers offer this it builds lender confidence.
Maximization Component of a Credit Score
This refers to how much of his or her available credit an individual is using. Using too much of this credit can negatively impact a person's credit score.
Time Component of a Credit Score
This aspect of your credit score looks at your credit history. If you have no credit you may have difficulty obtaining credit because you lack a history of good payments for lenders to assess.
Payment History Component of a Credit Score
This represents the largest component of your credit score at 35%. It deals with how well you've historically paid off accounts.
Loan Maturity
This component of loans deals with how long it will take to pay a loan fully. Loans with long maturity dates require more interest than shorter loans.
Fair Credit Reporting Act
This act ensures consumers can access their credit reports and includes directions on correcting errors on these reports.
Truth in Lending Act
According to this Act, lenders must disclose credit terms and allow purchasers to review, sign and receive a copy of these terms.
Fair Credit Billing Act
This act serves as an amendment to the Truth in Lending Act. Under this act, credit card companies have to work quickly to correct any errors they make.
Federal Trade Commission (FTC)
An agency that tries to protect consumers from deception, fraud and unfair practices, such as discrimination
Unsecured Loan
These loans are offered without collateral. They are generally only given if you have good credit and usually have high interest rates. Examples include personal loans.
Personal Loan
You can take out these loans if you intend to personally use the money you receive. You may use it for home remodeling, a car, vacation or more.

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