Understanding and Managing Consumer Credit Quiz

Annual income is a key factor in credit score calculations, reflecting one's ability to repay debts.

APR, or Annual Percentage Rate, represents the total cost of borrowing, including interest and fees.

To maintain a healthy credit score, it's recommended to keep credit utilization below 20%, ensuring responsible use of available credit.

The grace period on a credit card is a window during which no interest is applied to new purchases if the full balance is paid.

Credit reports offer a detailed record of financial activities, aiding lenders in assessing creditworthiness.

Opening numerous credit accounts quickly can harm a credit score by signaling higher risk.

The debt snowball method involves paying off small debts first, providing a motivational boost for debt reduction.

Secured credit cards require collateral, reducing risk for lenders and helping build credit.

Closing a credit card account can reduce available credit and impact the credit utilization ratio, potentially lowering the credit score.

The debt-to-income ratio gauges whether a person can manage additional debt based on their income.

'Charge-off' in credit reports signifies a creditor ceasing attempts to collect a debt, though it still impacts credit negatively.

The Truth in Savings Act safeguards consumers by requiring disclosure of terms and conditions in savings account transactions.

Credit counseling agencies assist by negotiating with creditors to develop manageable repayment plans.

The Credit CARD Act of 2009 aims to shield consumers from deceptive and unfair credit card practices.