Understanding Credit

Front

Which of the following is the best definition of credit? A system for saving money over time. The ability to borrow money with the agreement to repay it later. The amount of money you earn annually. A reward for using a debit card responsibly.

Back

The ability to borrow money with the agreement to repay it later.

Front

What percentage of your credit score is determined by your credit utilization rate?

Back

30%

Front

What happens if you apply for multiple credit cards in a short period of time?

Back

Your credit score may decrease due to multiple hard inquiries.

Front

Which strategy is part of the snowball method for managing debt?

Back

Focus on paying off the smallest debts first.

Front

How can checking your credit report benefit you?

Back

It allows you to identify and correct errors that may affect your credit.

Front

Why is having a longer credit history beneficial?

Back

It shows lenders that you have experience managing credit over time.

Front

Closing an old credit card account always improves your credit score.

Back

False

Front

Making the minimum payment on a credit card each month is enough to build excellent credit.

Back

False

Front

Paying off a loan early can positively impact your credit score in some cases.

Back

True

Front

You can dispute errors on your credit report for free.

Back

True