Section 3.1 installment payments DR Chapter

Front

What is a credit score?

Back

A numerical representation of a person's creditworthiness, indicating the likelihood that they will repay debt.

Front

Why do banks and lenders use credit scores?

Back

To assess the likelihood that someone is able to repay debt.

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What is the importance of living on less than you make?

Back

It is essential for saving money and building wealth.

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What is considered a good emergency fund?

Back

3-6 months of living expenses.

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What factors contribute to a person's FICO score?

Back

Payment history, amounts owed, length of credit history, new credit, and types of credit used.

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What is the greatest tool for building wealth?

Back

Your income.

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What does it mean to have zero debt?

Back

It means not owing any money to lenders or creditors.

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What is the purpose of an emergency fund?

Back

To provide financial security in case of unexpected expenses or loss of income.

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How can investing in a Roth IRA benefit you?

Back

It allows for tax-free growth and tax-free withdrawals in retirement.

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What is the relationship between income and savings?

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Higher income can lead to greater savings potential if expenses are managed.