FREE CCC Credit Analysis & Debt Management Questions and Answers
What is the primary purpose of credit analysis?
Credit analysis evaluates a borrower’s financial history and ability to repay debt, helping lenders assess risk and make informed decisions.
What is the best strategy for reducing credit card debt efficiently?
The debt avalanche method prioritizes paying off high-interest credit card debt first, reducing overall interest costs and speeding up debt repayment.
Which debt management strategy involves negotiating lower interest rates or payments with creditors?
Debt settlement or negotiation allows borrowers to work with creditors to lower interest rates or settle outstanding balances.
Which factor has the greatest impact on a credit score?
Payment history is the most significant factor affecting a credit score, as it reflects how consistently debts are paid on time.
Why is maintaining a good credit score important?
A good credit score improves access to favorable loan terms, lower interest rates, and better financial opportunities.
Why is debt-to-income (DTI) ratio important in debt management?
The DTI ratio helps determine a borrower’s ability to manage and repay debt by comparing total debt obligations to income.