Loan and Credit Flashcard

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What is a secure loan?

Back

A secure loan is a type of loan that is backed by collateral, which is an asset that the lender can claim if the borrower fails to repay the loan.

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What is collateral in the context of loans?

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Collateral is an asset that a borrower offers to a lender to secure a loan. It serves as a protection for the lender in case the borrower defaults.

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What is the FICO score?

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The FICO score is a credit score that lenders use to assess a borrower's creditworthiness, based on their credit history.

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What is the most crucial aspect of creditworthiness?

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Payment history is the most crucial aspect of creditworthiness, as it reflects how reliably a borrower has paid their debts in the past.

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How does interest on a credit card compare to rewards earned?

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Typically, the interest charged on a credit card is higher than the rewards earned from purchases.

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What happens to interest rates if you have a low credit score?

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If you have a low credit score, the interest rates on new credit cards are likely to be very high.

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How can you calculate the cost difference between store brand and name brand items?

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To calculate the cost difference, subtract the total cost of store brand items from the total cost of name brand items.

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What is the impact of a high credit card balance on your credit score?

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A high credit card balance can negatively impact your credit score, making it harder to obtain new credit.

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What is the relationship between credit utilization and credit score?

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Credit utilization, which is the ratio of your credit card balances to your credit limits, significantly affects your credit score; lower utilization is better.

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What is a rewards credit card?

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A rewards credit card is a type of credit card that offers points, cash back, or other benefits for purchases made with the card.