Question

1. credit that you can borrow on an ongoing basis; it has interest rates, a spending limit, and monthly payments.
2. this is a legal process in which a lender repossesses and attempts to sell a borrowers property when they fail to make their payments.
3. is a person who borrows money from others, and the money borrowed is called debt, which must be repaid.
4. is something pledged as security for repayment of a loan, to be forfeited in the event of a default.
5. a number ranging from 300 - 850 that represents your creditworthiness to lenders.
6. is a legal proceeding involving a person or business that cannot repay all its outstanding debts. this usually is imposed by a court order initiated by the debtor.
7. retailers commonly issue these for being used only in their business.
8. this is the amount of money the credit - card company will charge you unless you pay off your balance each month.

directions: read the statements and write whether they are true or false 2pts each

1. to use credit, you first must qualify; to qualify, the bank needs to be assured that you can make your payments and pay off your debt.
2. credit is an excellent tool if used wisely; if used poorly, it can have an extreme and damaging effect on your personal finances and life.
3. credit statement is a report about your credit activity and credit situation, such as loan

Explanation:

1. To use credit, banks need assurance of repayment ability, so this is true.
2. Wise use of credit is beneficial while poor use can be harmful, so this is true.
3. A credit - statement reports credit activity and situation like loans, so this is true.

For the fill - in - the - blank part:

1. Credit card (fits the description of ongoing borrowing with interest, limit and payments).
2. Foreclosure (the legal process of lender repossessing property).
3. Borrower (person who borrows money).
4. Collateral (pledged for loan repayment).
5. Credit score (number representing creditworthiness).
6. Bankruptcy (legal process for non - repayment).
7. Store credit cards (issued by retailers for in - store use).
8. Interest (charged by credit card company if balance not paid off monthly).

Answer:

1. True
2. True
3. True
4. Credit card
5. Foreclosure
6. Borrower
7. Collateral
8. Credit score
9. Bankruptcy
10. Store credit cards
11. Interest