Understanding Credit Scores and Their Implications Quiz

A credit score is a numerical representation of an individual's creditworthiness.

The purpose of a credit report is to record an individual's credit history.

The Debt-to-Income Ratio (DTI) is used to evaluate the amount of debt relative to income in the context of creditworthiness.

The purpose of a grace period in credit card terms is to waive interest charges for a certain period.

The 'credit utilization ratio' in credit scoring refers to the percentage of available credit being used.

FICO is not a credit bureau and is not one of the major credit reporting agencies in the United States.

Income and employment history are factors that typically contribute to a credit score.

Individuals are entitled to receive a free credit report from each major credit bureau once every 12 months.

A 'hard inquiry' on a credit report negatively affects the credit score.

Opening a new credit account may temporarily lower the credit score.

The primary purpose of a credit freeze is to prevent new credit accounts from being opened.

Checking your own credit score is a soft inquiry on a credit report.

Negative information, such as a late payment, stays on your credit report for 7 years.

A good credit score range, according to FICO, is between 800 and 850.

'Credit utilization' in credit scores refers to the percentage of available credit being used.

The primary purpose of a FICO score is to evaluate credit risk.

The term 'subprime' in the credit industry indicates individuals with a higher credit risk.

Payment history is the sole factor in determining a credit score.

Closing a credit card account may lower the credit score.