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Basics Beginner: Credit

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1.
In the language of credit, capacity refers to _______.
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Your ability to pay your debts. To creditors, the term is a measure of your financial health.
2.
The "principal" of a loan refers to the _______.
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Original amount borrowed. The principal is the original amount borrowed.
3.
Which law gives a consumer the right to have a credit report item dispute resolved within 30 days?
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Fair Credit Reporting Act. The FCRA gives consumers the right to have disputed information investigated and reported back to them within 30 days.
4.
Which of the following is the largest determiner of your FICO score?
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Payment history. Your payment history carries more weight than any other measure.
5.
When getting a debt consolidation loan, you can reduce your interest rates by _______.
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Putting up collateral. Putting up collateral reduces the risk that your creditor takes on, thus qualifying you for a lower interest rate.
6.
Having no credit profile can result in you being denied credit.
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True. Creditors like to know that you have a history of using credit.
7.
Paying on credit is cheaper than buying outright because you make smaller monthly payments than one large payment.
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False. Paying on credit is more expensive due to the buildup of interest.