Terminology Review 6-Managing Credit

What percentage of your credit score is based on the amounts you owe to creditors?

• 10%

• 30%

• 50%

• 70%

What does the Annual Percentage Rate (APR) represent?

• The total amount of money borrowed

• The cost to borrow money each year, expressed as a percentage

• The monthly payment amount

• The total interest paid over the loan term

Who is an authorized user in terms of credit card usage?

• A person legally responsible for paying the bill

• A person who can use the card but isn't responsible for the bill

• A person who owns the credit card

• A person who issues the credit card

What is the primary purpose of bankruptcy?

• To increase credit score

• To allow freedom from debts while providing repayment opportunities

• To acquire more loans

• To avoid paying taxes

What is the "Buy, Borrow, Die" strategy primarily used for?

• Increasing savings

• Reducing debt

• Taking out low-interest loans as income

• Avoiding bankruptcy

What is Chapter 7 Bankruptcy also known as?

• Reorganization bankruptcy

• Liquidation bankruptcy

• Debt consolidation

• Credit counseling

What is Chapter 13 Bankruptcy also known as?

• Liquidation bankruptcy

• Reorganization bankruptcy

• Debt settlement

• Credit repair

What does a charge-off indicate?

• A debt that is likely to be collected

• A debt that is unlikely to be collected

• A debt that has been fully paid

• A debt that is in good standing

What is the role of the Consumer Financial Protection Bureau (CFPB)?

• To collect taxes from consumers

• To regulate financial products and services

• To provide loans to consumers

• To manage consumer credit scores

What is a credit bureau?

• A company that provides loans to consumers

• A company that collects and sells credit information

• A government agency that regulates banks

• A nonprofit organization that advises on debt