Understanding Creditworthiness and Financial Health Quiz

Creditworthiness is assessed based on financial factors, not personal preferences like favorite color.

APR represents the total cost of borrowing, including interest and fees, expressed as a yearly percentage.

Closed credit is not a standard credit type; common types include revolving credit and installment credit.

Secured debt is supported by collateral, such as a car or house, providing lenders with asset security.

A credit limit is the highest amount a credit card holder can borrow, determined by the card issuer.

A credit report is a detailed record of an individual's borrowing and repayment activities, influencing creditworthiness.

S&P Global is a financial information company, not a credit bureau. Credit bureaus include Equifax, Experian, and TransUnion.

DTI assesses the proportion of a person's income used to repay debt, helping evaluate their financial stability.

FICO scores are commonly used by lenders to evaluate an individual's creditworthiness based on their credit history.

Maintaining a credit utilization ratio below 10% is advised to positively impact credit scores.

Derogatory marks are negative entries on credit reports, indicating missed payments, defaults, or other adverse financial events.

The debt snowball method involves paying off smaller debts first, gaining momentum to tackle larger debts.

Timely bill payments positively impact credit scores by demonstrating responsible financial behavior.

A cosigner assumes responsibility for loan payments if the primary borrower fails to repay.