Financial Algebra Benchmark Review Part 1

Front

What are the two most important factors in calculating your credit score?

Back

Payment history and total debt.

Front

What does the term 'buy, borrow, die' describe?

Back

The pattern where high-interest loans trap people in a cycle of debt.

Front

How can debt increase a person’s net worth?

Back

Debt allows you to buy valuable assets, like a house.

Front

What is the Debt Snowball method for paying off debt?

Back

Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance.

Front

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Back

Chapter 7 bankruptcy sells your assets; Chapter 13 bankruptcy allows you to keep assets if you follow a repayment plan.

Front

What is a credit score?

Back

A numerical representation of a person's creditworthiness, based on credit history.

Front

What is the purpose of a budget?

Back

To plan and track income and expenses to manage finances effectively.

Front

What is the difference between secured and unsecured debt?

Back

Secured debt is backed by collateral; unsecured debt is not.

Front

What is an interest rate?

Back

The percentage of a loan amount charged as interest to the borrower.

Front

What is the significance of a credit report?

Back

It provides a detailed account of an individual's credit history and is used to assess creditworthiness.