Unit 5: Credit Quiz Review

Credit is the ability to _________ and ____________ later. 

• Buy now; pay
• Save now; spend
• defer later; pay now
• see; smell

To ________ on a loan is to fail to repay the loan.

• default
• bounce
• defer
• exchange

____________ is when a bank or mortgage lender seizes a house and sells it because the homeowner cannot pay the mortgage loan.

• Repossession
• Foreclosure
• Default
• Bankruptcy

How do banks make money off of the credit they issue?

• They charge a large, one-time fee at the start of the loan

• They take out a small fee each month from your checking account

• They charge a high interest rate on the loan

• This is a trick question - they DON'T make money!

Which of the following is NOT a typical type of credit?

• Mortgage

• Overdraft

• Credit Card

• Pre-Paid Debit Card

If the collateral for your secured loan can be taken away, why get a secured loan at all?

• Because they usually have a higher interest rate

• Because they usually have a lower interest rate

• Banks give you an extra 90 days to make a missed payment

• Banks typically don't charge interest for the first 12 months

What may NOT impact the interest rate on your loans?

• Your relationship with the financial institution

• Your credit score

• The loan amount

• Your level of education

How do you avoid paying interest on your credit card (or any other loan for that matter)?

• Always make the minimum payment over time

• Pay interest 1st, then pay what you can on leftover balance

• Always make the full payment on time

• Pay the principal 1st, then pay what you can on interest

Which is TRUE when you make only the minimum payment each month?

• You are charged interest on the remaining balance

• Your credit line is restored to its maximum amount

• Credit card companies have permission to sell your information

• It is the fastest way to pay off your debt

Which of the following is TRUE about a credit report?

• It is a complete history of one type of credit you have

• Credit reports are maintained by the 5 main credit bureaus

• You can get a copy of your credit report for free

• You can get a credit report only when you're 21 years old