credit formative q's

What is credit?

• Credit is a supply of money, goods or services at present in exchange for the promise of future payment.
• Credit is a person's credit score.
• Credit is a person's ability to only use a credit card.

Which is an example of an Open-ended loan?

• Car loan
• College loan
• Mortgage (house) loan
• Credit card bill

What is the difference between principal and interest?

• Interest is a one-time fee the borrower pays when receiving the principal amount of money for the loan.
• Interest is the amount of money that is added to the principal amount borrowed in order for the lender to make a profit.
• Principal is a one-time fee the borrower pays when receiving the interest amount of money for the loan.
• Principal is the amount of money that is added to the interest amount borrowed in order for the lender to make a profit.

What are the 3 C's of Credit?

• Character, Credit, Capacity
• Character, Capital, Capacity
• Capital, Credit, Karma
• Credibility, Credit, Capacity

Where do money lenders check into a borrower's credit history?

• From a financial institution
• From a Credit Card company
• From a Credit Bureau

Which credit applicant is MOST likely to be approved for a loan by a lender?

• Applicant 1: Highest income, rents an apartment for the past year, always pays on time but is usually the minimum payment, has a revolving and closed end credit, credit score 585
• Applicant 2: Middle income, rents an apartment for the past 3 years, pays bills on time and mostly in full, has a credit card and an installment loan, has a credit score of 725
• Applicant 3: Lower income, lives with parents, has a credit card that they pay on time every month, credit score 615

For the best credit score, it is recommended you use roughly what percentage of your credit limit on credit cards?

• 0-30%
• 31-50%
• 51-75%
• 76-100%

Check all the following that are positives for your credit score

• Having used a variety of different forms of credit responsibly (credit cards, car loans, etc.)
• Having an average age of your credit accounts of less than a year
• Never having a "derogatory" mark like bankruptcy or being sent to collections
• Having many hard inquiries (10+) each year

How often can you have free access to your credit report?

• 1 time a year from each of the 3 credit bureaus
• 3 times a year from the same credit bureau
• Once every other year from each of the credit bureaus
• You cannot access your report for free, you will always need to pay a small fee

How long does bankruptcy stay on a person's credit history?

• 7 years
• 10 years
• 15 years
• 20 years