Credit Management Quiz

Credit Score

• A numerical rating reflecting an individual's credit-worthiness, indicating the likelihood of repaying debts.
• The FICO score is the most widely used credit score in the United States.
• Based on information from credit reports generated by three main credit bureaus.

Credit Limit

• The maximum amount of money that can be charged to a credit card.
• Exceeding this limit may result in declined transactions and potential penalties.

Credit Report

• A detailed record of an individual's credit history, including loans and repayment activity.
• Contains identifying information (names, addresses) to match individuals with their credit histories.

Fair Credit Reporting Act

• A federal law ensuring accuracy, completeness, and privacy of information in credit reports.
• Consumers have the right to access their credit reports and dispute inaccuracies.

Federal Fund Interest Rate

• An interest rate established by the Federal Reserve Bank that influences government loan interest rates.

Hard Credit Inquiry

• Occurs when a creditor checks your credit history to make lending decisions.
• Affects your credit score and remains on credit reports for up to two years.

Soft Credit Inquiry

• A background check on credit that does not impact your credit score, often conducted for employment purposes.

Credit Bureaus

• Companies, also known as credit agencies, collect and analyze individual credit information.
• Major credit bureaus in the U.S. include Equifax, Experian, and TransUnion; they are private, for-profit entities regulated by the government.

Credit History

• A comprehensive record of all borrowing and repayment activities, including loans, credit lines, and payment records.
• Differentiates between the actions taken (credit history) and the documented proof (credit report).

Default

• Occurs when a borrower fails or refuses to repay a debt or required payment.

Initial Fraud Alert

• A temporary alert placed on a credit file to help prevent identity theft.
• Lasts for 90 days and can be renewed if necessary.

Test your knowledge on credit scores, reports, and limits. This quiz covers essential topics like the Fair Credit Reporting Act and federal interest rates, providing a comprehensive look at personal finance. Assess your understanding of the factors that impact creditworthiness.