Understanding Consumer Credit and Financing Quiz

Revolving credit allows repeated borrowing and repayment.

Credit scores are based on financial behavior, not ethnicity.

Legal age for credit card ownership in many jurisdictions.

FICO is a company providing credit scoring solutions.

Lenders may pursue legal action to recover defaulted amounts.

APR represents the cost of borrowing on credit cards.

Consistent on-time payments are crucial for credit scores.

It caps the amount of credit available to a borrower.

Business loans are typically for commercial purposes, not personal use.

Credit scores assess creditworthiness for various financial purposes.

APR represents the yearly cost of borrowing.

It provides time before interest accrues on purchases.

Leasing offers lower monthly costs compared to buying.

Secured credit is backed by assets to minimize risk.

Rewards cards provide benefits for spending.

It details how loan payments reduce principal and cover interest.

These loans lack collateral, posing higher risk for lenders.

Penalties incentivize borrowers to maintain full loan terms.

It simplifies repayment and reduces overall interest costs.

Transfers can streamline repayment and potentially save on interest.

DTI assesses financial obligations relative to income.

Co-signers guarantee repayment if the primary borrower fails.

Timely payments demonstrate responsible credit behavior.

Credit scores focus on financial behavior rather than income.

Soft inquiries have no impact on credit scores and are for personal review purposes.