Junior Achievement Review

Which of these is LEAST LIKELY to determine credit worthiness?

• payment history

• length of employment

• personal educational background

• personal health history

Answer explanation

Personal health history is not reflected in credit worthiness. There are many other factors that determine credit worthiness other than the ones listed... like annual income, type of occupation, and length of credit history.

Jose is applying for an automobile loan. The lender considers Jose creditworthy MOST LIKELY because Jose

• has made on-time payments to other loans.

• has a new job.

• has many credit cards already.

• has a home mortgage loan.

Answer explanation

The lender considers Jose creditworthy MOST LIKELY because he has made on-time payments to other loans. Lenders want to know you are a good risk to borrow money, and making payments on time with other loans- whether they be credit cards, mortgages, etc- is the best way for them to make that determination.

Ability to obtain goods and services before payment, or money lent or made available, both with specific guidelines for repayment.

• Credit

• Debit

• Interest

• Money

Which of these is NOT an example of a fixed expense in a budget?

• car payment

• mortgage payment

• car insurance payment

• expenses for a birthday party

Answer explanation

Fixed expenses are those items in a budget which are consistent from month to month. In this list, only the expenses for a birthday do not fit this category.

A new video game is coming out in a month and you would like to have enough money to purchase it. Which of these is your BEST financial choice in buying the game?

• put money into a savings account at a bank

• ask about how to invest in the stock market

• spend more money now and buy the video game with a credit card

• ask the store if they will loan you the money for the video game

Answer explanation

Your BEST choice is to put money into a savings account at a bank If you really want the video game, saving is the best option. Using credit is a poor choice, for the game will end up costing much more than the listed price when you figure in the interest you'll be charged on the credit card.

This term describes a business that stores the money of people and businesses and makes loans to its customers.

• Bank

• Interest

• Debit

• Money

While credit is all or part of an amount a borrower may use, debt is

• the amount of credit that is used.

• repaid before credit is extended.

• the unused portion of credit.

• added to the credit amount.

Answer explanation

While credit is all or part of an amount a borrower may use, debt is the amount of credit that is used. Credit worthiness is partially determined by the borrower's track record of repaying debt, but all debt does not have to be repaid before credit is extended.

What is an example of credit?

• A person withdraws money from a bank account using an ATM card.

• A person deposits a paycheck into a savings account.

• A person borrows money from a finance company to buy a car.

• A person pays interest on an existing mortgage.

Answer explanation

An example of credit is when a person borrows money from a finance company to buy a car. Once credit is extended to a person and is used for a purchase, the credit is converted to a debt, and the person has the financial obligation to repay the loan.

Identify the items that are part of an individual's budget.

• Income

• Expenses/Expenditures

• Utilities

• Volunteer Activities

• Productive Resources

This is a type of banking card that, when used, withdraws money from a banking account that is linked to that card.

• Debit

• Credit

• Loan

• Bank