personal Finance week 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) Credit is borrowed money that you can use to purchase things you need when you need them and then repay the funds back at an agreed on time

2. What is a credit score? (0.5 points) A credit score is a number based on a level analysis of a person's credit files, to represent the creditworthiness of that person.

3. What is installment credit? (0.5 points) Loan repaid with interest owed, in equal periodic payments of principal and interest

4. What is revolving credit? (0.5 points) a credit plan that imposes regular repayments and a predetermined spending limit

5. What is noninstallment credit? (0.5 points) a system of credit that is payable in one lump-sum amount by a specified date.

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 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) prepaid 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 other companies and organizations

5. What is a debt settlement program? (0.5 points) a program that says it can get you out of debt by negotiating payments with your creditors

6. What is bankruptcy? (0.5 points) the inability to pay back your creditors

Lesson 3 (3.0 points)

1. What is an annual percentage rate? (0.5 points) a yearly rate that doesn’t take into account any compounding interest throughout the year

2. What is an annual percentage yield? (0.5 points) a yearly rate that