Unit 5 Vocabulary Quiz: Understanding Credit and Finance Terms

Jaylnn is planning to apply for a loan to buy a new car. What is a credit score?

• A measure of your annual income

• A numerical expression representing the creditworthiness of an individual

• The interest rate on a loan

• The total amount of debt you owe

Ava is trying to improve her credit score. Which of the following is typically considered when calculating a FICO score?

• The number of debit cards you own

• Your payment history

• Your annual salary

• The number of dependents you have

Ryan has a credit card with an annual fee of 50 dollars and a late fee of 25. How much would Ryan pay in fees if he is late on 3 payments in a year?

(a)  

Alexia is struggling with high-interest credit card debt. Explain how a balance transfer can be beneficial for her in managing her credit card debt.

• It allows you to close your credit card account without penalties.

• It lets you transfer your debt to a card with a lower interest rate, potentially saving on interest payments.

• It increases your credit limit automatically.

• It eliminates the need to make minimum payments.

Zoe has a credit card with a credit limit of 5,000 and an account balance of 1,200. What is the available credit?

(a)  

Autyana recently discovered that her personal information was stolen and used to open several unauthorized credit accounts. Which is a potential impact of this identity theft on Autyana's credit score and financial health.

• It can improve your credit score by adding new accounts.

• It has no impact on your credit score.

• It can severely damage your credit score and lead to financial losses.

• It only affects your ability to open new credit accounts.

Nikki recently got her first credit card and is learning about its terms. What is the purpose of a grace period in credit card terms?

• To allow cardholders to skip payments without penalties

• To provide a period during which no interest is charged on new purchases if the balance is paid in full

• To increase the credit limit temporarily

• To reduce the annual fee

Michael is considering using his credit card for a cash advance instead of a regular purchase. How does a cash advance differ from a regular credit card purchase?

• Cash advances have lower interest rates than regular purchases.

• Cash advances are interest-free for the first 30 days.

• Cash advances typically have higher interest rates and fees compared to regular purchases.

• Cash advances increase your credit score.

Isreal is considering adding his friend Erwin as an authorized user to his credit card account. Evaluate the advantages and disadvantages of this decision.

• It always improves your credit score and allows for doubling of your credit limit.

• It allows the authorized user to build credit, but you are responsible for their charges.

• It reduces your credit limit and amount of credit score by half

• It eliminates the need for a credit check.

After experiencing identity theft, NBA Superstar Luis R. decided to take a specific action to protect his credit. What did he do?

• A temporary increase in her credit limit

• A measure to prevent new credit accounts from being opened in her name, often used after identity theft

• A reduction in her interest rate

• A method to close her credit card account permanently