Son, Jiho

10-Cambridge
1. What is the main disadvantage in using a credit card?

One of the many disadvantages of using or having a credit card is the impulsive or unnecessary
wanted purchases of people. Most people believe that buying something now and paying it a later time is
good because they can spend their cash on other things.

2. As an authorized user to the family's account, what are your responsibilities?

As an authorized user of a family account such as the one we are using at school, it is our
responsibility to keep log-in information private to those who do not belong to the suit. Moreover,
information we found on the family account should not be shared to the public.

3. Describe the relationship of Interest Rates, Credit Scores and Credit Line.

Interest rates mean the additional amount we pay whenever we borrow money from a bank or any
loan companies. A low interest rate loan is much easier to pay because there is less interest added to pay
your monthly dues. Banks use the individual credit score-the number that measures your credit
worthiness- as one factor in deciding what or how much interest rates should be applied. Credit line or
line of credit is a set amount of money that can be borrowed as needed, paid back and borrowed again. a

4. Briefly describe the five factors of Credit Score.

Factors that affect Credit Scores are :

A. Payment history- They consider the frequency and the severity of missed payments on
an individual’s loan. One way for a borrower to make a good credit score is to make consistent and timely
payments on loans.

B. Credit utilization- this is the percentage of available credit that has been borrowed.
Borrowers who habitually max out their credit cards are usually offered lower credit limits.

C. Length of Credit History- the length of time each account has been opened and the
length of time since the account’s most recent action. A longer credit history provides more information
and offers a better picture of long-term financial behavior.

D. New Credit- New accounts will lower your average account age, which will have a
larger effect on your FICO score.

E. Credit Mix- This means repaying a variety of debt products indicates the borrower can
handle all sorts of credit.
Son, Jiho
10-Cambridge
5. What does "$0 Fraud Liability" mean?

This means that a borrower is not responsible for any unauthorized charges made on your
account after you have reported loss or theft of your card.

6. Discuss how Secured Credit Cards work

A secured credit card is backed by a cash deposit you make when you open the account. The
deposit is equal to your credit limit.