Credit and Debt

Write the order in which you would pay off these debts using the debt avalanche method

The length of a loan agreement. Ex: Your home mortgage is a 30 year loan

• Interest

• Principal

• Term

• Liquidation

A method of debt repayment whereby the borrower prioritizes paying down debts with the smallest balances first

• Debt snowball method

• Debt avalanche method

• Chapter 7 Bankruptcy

• Chapter 13 Bankruptcy

The maximum amount that may be borrowed on a credit card

• Credit Score

• Credit Utilization

• Outstanding Balance

• Credit Limit

How can your credit score impact your financial well-being?

• Only consumers with high scores are approved for credit 

• Consumers with low scores get lower interest rates on loans than those with high scores 

• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be 

• It generally has no impact on your financial situation

Write the order in which you would pay off these debts using the debt snowball method

Draw a reason why it may be beneficial for a young adult to establish a credit score.

What is debt?

• Money that is spent

• Money that is owed because of borrowing

• Money that you lend to others

What is the best way to manage credit and debt?

• use rewards

• spend now worry later

• Make big purchases

• set goals and budget

What is true about a credit score?

• Predicts the likelihood that a debt will be repaid

• A low credit score represents a low risk to banks

• The higher the credit score, the higher the interest rate you can get

• credit scores are not important to banks