Applying for Credit. Chapter 26.1. OBJECTIVES. Explain how you can develop a credit history Examine factors to consider when deciding which credit card to secure Define three factors that creditors consider when granting credit. THE MAIN IDEA.
Applying for Credit
Annual Percentage Rate (APR)
the cost of credit on a yearly basis
a loan given in cash by a credit card company in anticipation of the borrower’s being able to repay it
someone who agrees to be responsible for a debt if the main applicant does not repay it
an amount of time allowed to repay a debt without having to pay interest charges
Capacity:An applicant’s ability to pay.
The Three Cs of Creditworthiness
Character:An applicant should be trustworthy.
Capital:The money an applicant has beyond debts.
the maximum amount a card holder can charge on a credit card
Apply for credit, be approved, use the credit, and make payments to the creditor
2. What is an annual percentage rate? Why is it important?
The cost of credit on a yearly basis; it determines the amount of interest that a consumer will pay on a debt
3. What are the three Cs of credit?
Capacity, Character, and Capital