Section 5 Study Questions

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Alia Freborg 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) 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) A 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) A 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) noninstallment Lesson 2 (3.0 points) 1. Name at least one of the steps in establishing credit. (0.5 points) One of the steps in establishing credit is opening 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) Department store or gas cards. 3. What are debt services default? (0.5 points) It is the failure to make a payment. 4. What is the Better Business Bureau? (0.5 points) It 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) They 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) The inability to pay back your creditors, to the extent

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