Unit 5 Test Finance Managing credit

Front

What are the two most important factors in calculating your credit score?

Back

Payment history and total debt

Front

What would be a detrimental strategy for Heather, who is trying to pay off her debt? Options: Reducing spending by canceling some of her streaming subscriptions, Taking extra shifts at work to increase her income, Making more than the minimum required payment on her debt, Applying for another credit card to use in case she runs out of cash paying off her debt

Back

Applying for another credit card to use in case she runs out of cash paying off her debt

Front

How can your credit score impact your financial well-being?

Back

Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be.

Front

Frank and Jasmere are each shopping for a new car for themselves. Each will need a $20,000 loan that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE? Jasmere will likely receive a lower interest rate than Frank, Frank will likely receive a lower interest rate than Jasmere, Both will receive the same interest rate regardless of their credit scores, Neither will be approved for the loan due to their credit scores

Back

Frank will likely receive a lower interest rate than Jasmere

Front

What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time? Options: Snowball method, Make minimum payments, High rate (or avalanche) method, Consolidate multiple debts into one new loan

Back

High rate (or avalanche) method

Front

Who tracks all of your credit information?

Back

Credit reporting agencies (Equifax, Experian and TransUnion)

Front

Which of the following things should you have ready when contacting a credit reporting agency to report an error on your credit report?
Your preferred payment method to pay for fixing the error
A list of all of your financial accounts and balances
An explanation of the mistake and any evidence you have supporting your claim
References from a non-family member vouching for your creditworthiness

Back

An explanation of the mistake and any evidence you have supporting your claim

Front

Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?
- Paying off a loan early
- Applying for several credit cards
- Increasing your credit limit
- Making all payments on time

Back

Applying for several credit cards

Front

Which best describes the Debt Snowball method for paying off debt? Options: Only make payments on your smallest debt first, then move on to your second smallest debt, and so on; Once your debt "snowballs" out of control, hire a certified credit counselor to help get your finances back on track; Make the monthly minimum payments on all your debts, then put any extra cash toward the debt with the highest balance; Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance

Back

Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance

Front

Which of these represents a potential consequence of neglecting to pay your federal student loans? Wages or tax refunds can be garnished, Passport revocation, Driver’s license suspension, Termination from your job

Back

Wages or tax refunds can be garnished