#1
What is a credit score?
A numerical representation of a person's creditworthiness
ExplanationMeasure of financial trustworthiness.
#2
What does the term 'credit utilization' refer to in the context of credit scores?
The percentage of available credit you are currently using
ExplanationRatio of used to available credit.
#3
What is the difference between a credit report and a credit score?
A credit score is a numerical representation, while a credit report is a detailed history.
ExplanationScore vs detailed record.
#4
What is the difference between a debit card and a credit card?
A debit card is linked to a bank account, while a credit card is a form of loan.
ExplanationFunds source difference.
#5
What is the significance of a 'secured loan' in the context of borrowing money?
A loan that requires collateral
ExplanationCollateral-backed borrowing.
#6
What does APR stand for in the context of loans?
Annual Percentage Rate
ExplanationAnnual loan interest rate.
#7
What is the purpose of a co-signer on a loan?
To share the responsibility of repayment
ExplanationShares loan responsibility.
#8
What is a FICO score?
A credit scoring model
ExplanationPopular credit scoring system.
#9
What is the purpose of a grace period on a credit card?
A period during which no interest is charged on new purchases
ExplanationInterest-free purchase period.
#10
What does 'identity theft' refer to in the context of financial security?
Unauthorized use of someone's personal information
ExplanationIllegal personal data use.
#11
What is the significance of the Debt Snowball method in debt repayment?
Prioritizing repayment of the smallest debts first
ExplanationFocused debt repayment strategy.
#12
What does 'Collateral' refer to in the context of loans?
An item of value that is used to secure a loan
ExplanationSecurity for loan repayment.
#13
What is a freeze on a credit report?
A security measure to prevent identity theft
ExplanationIdentity theft prevention measure.
#14
What is the significance of a debt-to-income ratio in financial planning?
It measures how much of your income goes towards paying debts
ExplanationDebt repayment burden assessment.
#15
What is the purpose of a secured credit card?
To build or rebuild credit
ExplanationCredit-building tool.
#16
What is a financial emergency fund, and why is it important?
A fund set aside for unexpected expenses or job loss
ExplanationSafety net for unforeseen expenses.
#17
What is the concept of 'compound interest' in the context of savings and investments?
Interest calculated on the initial principal and the accumulated interest
ExplanationInterest on interest.