4A: Credit and Debt Goals

What is a FICO score used for?

• Determining the interest rate on a savings account

• Assessing a person's creditworthiness

• Calculating monthly mortgage payments

• Estimating annual tax returns

Which of the following is a strategy for managing credit effectively?

• Paying only the minimum balance on credit cards

• Using multiple credit cards to increase available credit

• Paying off the full balance each month

• Closing old credit accounts

What is the primary purpose of setting financial goals related to debt?

• To increase spending on luxury items

• To ensure a higher credit limit

• To reduce financial stress and improve financial stability

• To avoid paying taxes

Which of the following actions can help improve a FICO score?

• Applying for multiple credit cards at once

• Consistently making late payments

• Keeping credit card balances low

• Frequently closing old credit accounts

What is one common debt reduction strategy?

• Increasing monthly expenses

• Consolidating multiple debts into one

• Ignoring debt collectors

• Taking out new loans to pay off old ones

How does maintaining a good credit score benefit an individual?

• It guarantees a job promotion

• It ensures lower interest rates on loans

• It increases the amount of taxes owed

• It allows unlimited credit card usage

Which of the following is a simple procedure to check your credit score?

• Visiting a bank in person

• Requesting a credit report from a credit bureau

• Asking a friend for their score

• Estimating based on monthly expenses

What is the impact of making only minimum payments on credit card debt?

• It reduces the total interest paid over time

• It increases the time it takes to pay off the debt

• It improves the credit score immediately

• It eliminates the debt faster

Which of the following is a financial goal related to credit and debt?

• Buying a new car every year

• Saving for a vacation

• Achieving a debt-free status

• Increasing monthly entertainment expenses

What is a potential consequence of not managing credit effectively?

• Improved credit score

• Increased borrowing capacity

• Higher interest rates on future loans

• More investment opportunities