Personal Finance Section 5

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) 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) Is a number that tells lenders how likely you are to make payments on time 3. What is installment credit? (0.5 points) 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) Credit that is automatically renewed as debts are paid off 5. What is noninstallment credit? (0.5 points) Is credit that is paid all at once, in a single payments 6. Name at least one section of a credit report. (0.5 points) Inquiries Lesson 2 (3.0 points) 1. Name at least one of the steps in establishing credit. (0.5 points) Use Credit Wisely 2. Name at least one alternate option to establishing credit if you are unable to get a credit card yet. (0.5 points) Secured Credit 3. What is debt services default? (0.5 points) 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) Is an organization that reports on the reliability and ethics of companies and other organizations 5. What is a debt settlement program? (0.5 points) 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) is the inability to pay back your creditors, to the extent that you file legal papers that put your finances under the supervision of the court system. Lesson 3 (3.0 points) 1. What is an annual percentage rate? (0.5 points)