Understanding Credit Basics Flashcard

Front

Which of the following is an example of revolving credit? Mortgage loan, Credit card, Car loan, Student loan

Back

Credit card

Front

What does a credit score primarily measure?

Back

Your ability to repay borrowed money

Front

Which type of credit has a fixed number of payments over a set period?

Back

Installment credit

Front

What is the main difference between fixed-rate and variable-rate credit?

Back

The interest rate changes or stays the same

Front

Which of the following is NOT a factor in calculating a credit score? Payment history, Amounts owed, Favorite color, Length of credit history

Back

Favorite color

Front

What does amortization refer to in the context of loans?

Back

Paying off a loan over time with regular payments

Front

When selecting a credit card, which feature should you consider first? Options: Card color, Interest rate (APR), The bank’s logo, The card’s weight

Back

Interest rate (APR)

Front

Which of the following is an example of a fixed-rate loan?
Options:
Adjustable-rate mortgage
30-year fixed mortgage
Credit card
Payday loan

Back

30-year fixed mortgage

Front

What is the first step in buying a car with credit?

Back

Check your credit score

Front

If you want to minimize interest paid on a credit card, which strategy should you use?

Back

Pay the full balance each month