Credit Profile: Benefits and consequences of credit

Closing a credit account can negatively impact your length of credit.

• True

• False

An individual with a low credit score and high salary is likely to receive a credit card on the same terms as an individual with a high credit score and moderate salary.

• True

• False

Last year, Jack received a $5,000 personal loan from his credit union. He used the money to upgrade his SUV and take a summer-long camping trip. Six months later, Jack was informed that a lawsuit had been filed against him for default on the loan. Why did this happen?

• a) Because Jack had paid the loan in full after six months.

• b) Because Jack had failed to pay the loan per the agreed-upon terms.

• c) Because Jack had only paid back the principal amount of the loan.

• d) Because Jack had renegotiated the terms of the loan.

What step(s) can you take to avoid potential missed or late payments on a loan? More than one answer may be correct.

• a) Automate your loan payments from your bank account.

• b) Make payments once every two months.

• c) Make payments at the end of each month, after all your other bills have been paid off.

• d) Set up account notifications to receive an alert whenever payments are due

An individual with access to $50,000 worth of credit lines represents a lower risk to lenders than an individual with access to $10,000 worth of credit lines.

• True

• False

7. You have just been approved for a $25,000 car loan, at a rate of 9% for 60 months, with a down payment of $2,000. What is the ‘loan term’ for this loan? More than one answer may be correct.

• a) $25,000

• b) 9%

• c) 5 Years

• d) $2,000

Which of the following individuals has a credit mix that will be deemed ‘lowest risk’ by lenders?

• a) Lana has three credit cards.

• b) Blair has a car loan and a mortgage.

• c) Cleo has a credit card, a car loan, and a mortgage.

• d) Yu has two credit cards and a personal loan

Who among the following home loan applicants will get their loan approved?

• a) Michael has defaulted on his credit card payments 5 times in the previous year.

• b) Patricia has one credit card and pays diligently every month.

• c) Samantha has two credit cards with low credit card utilization and a low-interest car loan with no defaulted payments.

• d) Austin is a new college graduate who has high credit card utilization, car loan, and student loan