Unit 2 Credit and Loans Test

Front

What is the term for the cost of borrowing money, typically expressed as an annual percentage of the loan amount?

Back

Interest rate

Front

Which of the following factors does NOT affect your credit score? Payment history, Employment status, Credit utilization ratio, Types of credit in use

Back

Employment status

Front

Paying more than the minimum payment on a loan each month can:

Back

Decrease the total interest paid over the life of the loan

Front

What is the main benefit of having a good credit score?

Back

Access to better interest rates on loans

Front

Which of the following is a strategy to manage and repay multiple loans effectively?
The snowball method, Only paying the minimum amount due, Taking out a new loan to cover the old ones, Missing payments to save money

Back

The snowball method

Front

What is a secured loan?

Back

A loan that is secured by collateral, such as a house or car.

Front

What does APR stand for?

Back

Annual Percentage Rate

Front

Which of the following can increase your credit score over time?
- Frequently applying for new credit cards
- Maintaining a high balance on your credit cards
- Paying loans on time
- Closing old credit accounts

Back

Paying loans on time

Front

What happens if you only make the minimum payment on your credit card each month?

Back

You may end up paying more in interest over time

Front

What is the impact of late payments on your credit score?

Back

It decreases your credit score.