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Understanding Financial Credit and Borrowing Quiz

#1

Which of the following is a type of financial credit that does not require collateral?

Credit card
Explanation

Unsecured credit without collateral requirement.

#2

Which of the following is a characteristic of a secured loan?

Requires collateral
Explanation

Loan backed by pledged assets.

#3

Which of the following is a common form of unsecured loan?

Student loan
Explanation

Loan not backed by collateral.

#4

Which of the following is a type of credit that typically requires a down payment?

Auto loan
Explanation

Loan for purchasing vehicles.

#5

What is the term used to describe the fee charged by a lender for processing a loan application?

Origination fee
Explanation

Charge for processing loan requests.

#6

What is the term used to describe the interest rate that banks charge their most creditworthy customers?

Prime rate
Explanation

Interest rate for most creditworthy borrowers.

#7

What is the maximum number of days you typically have to repay a payday loan?

30 days
Explanation

Standard repayment period for payday loans.

#8

What is the term used to describe a borrower who fails to make timely payments on a loan?

Default
Explanation

Failure to fulfill loan repayment obligations.

#9

What type of interest rate remains constant throughout the term of a loan?

Fixed rate
Explanation

Interest rate that does not fluctuate.

#10

What does FICO stand for in the context of credit scoring?

Fair Isaac Corporation
Explanation

Company providing credit scoring models.

#11

What is the term used to describe the total amount of debt owed by an individual or organization?

Debt load
Explanation

Cumulative debt obligation.

#12

What is the term used to describe the process of assessing a borrower's creditworthiness?

Credit scoring
Explanation

Evaluating borrower's credit risk.

#13

Which of the following is not a factor used by lenders to determine creditworthiness?

Gender
Explanation

Gender is not a consideration for creditworthiness.

#14

What does the acronym 'APR' stand for in the context of borrowing?

Annual Percentage Rate
Explanation

Annual interest rate inclusive of fees.

#15

Which of the following is a factor that can affect your credit score negatively?

Maxing out credit cards
Explanation

Utilizing maximum credit limits.

#16

What is the term used to describe the maximum amount a borrower can spend using a credit card or line of credit?

Credit limit
Explanation

Maximum allowable credit balance.

#17

Which of the following is a factor that can positively impact your credit score?

Having a long credit history
Explanation

Extended credit account duration.

#18

What is the term used to describe the process of combining multiple debts into a single, larger loan?

Debt consolidation
Explanation

Aggregating debts into one account.

#19

What does the Debt-to-Income (DTI) ratio measure?

The amount of debt compared to income
Explanation

Ratio indicating debt relative to income.

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