#1
What is a credit score?
A score that measures your ability to manage credit responsibly
ExplanationCredit score reflects one's credit management skills.
#2
What does APR stand for in the context of loans?
Annual Percentage Rate
ExplanationAPR represents the yearly cost of borrowing, including interest and fees.
#3
Which of the following is NOT a factor that influences your credit score?
Number of social media followers
ExplanationSocial media following does not impact credit scores.
#4
What does 'credit utilization' refer to?
The amount of available credit you're using
ExplanationCredit utilization measures the percentage of credit in use.
#5
What is the grace period on a credit card?
The period during which you can make purchases without interest
ExplanationGrace period allows interest-free purchases for a specified time.
#6
What does 'debt-to-income ratio' indicate?
The ratio of your monthly debt payments to your monthly income
ExplanationDebt-to-income ratio shows the proportion of income used for debts.
#7
What is the difference between a secured and an unsecured loan?
Secured loans require collateral while unsecured loans do not
ExplanationSecured loans need assets as security; unsecured loans don't.
#8
What is the minimum payment on a credit card statement?
A fixed dollar amount set by the credit card issuer
ExplanationMinimum payment is the lowest amount to pay on a credit card.
#9
What is the primary purpose of a credit report?
To assess your creditworthiness
ExplanationCredit reports evaluate your ability to handle credit.
#10
What is the significance of a co-signer on a loan?
A co-signer guarantees repayment if the borrower defaults
ExplanationCo-signers ensure repayment in case of borrower default.
#11
How does bankruptcy affect a person's credit score?
It decreases the credit score
ExplanationBankruptcy leads to a decrease in credit score.
#12
What is the purpose of a credit freeze?
To prevent unauthorized access to your credit report
ExplanationCredit freeze blocks unauthorized access to credit reports.
#13
How does opening multiple new credit accounts within a short period affect your credit score?
It decreases your credit score
ExplanationOpening multiple accounts quickly lowers credit scores.
#14
What is the significance of a credit limit?
It is the maximum amount you can borrow on a credit card
ExplanationCredit limit denotes the maximum borrowing allowed on a card.