Personal Finance - Unit 8 Test

All of these are true about late credit card payments, EXCEPT...

• They can drop your credit score by as much as 100 points

• They are an extremely rare occurrence among American credit cardholders

• They can stay on your credit report for up to 7 years

• They are the largest factor in your overall credit score

Natalie asks 4 friends for advice on how to raise her credit score, which is currently at 650. Which is the strongest piece of advice?

• Close as many credit card accounts as you can

• Open up a savings account

• Pay your credit card bill on time each month

• Pay off your debts as slowly as possible

Which of the following actions would be included in your credit report?

• You bought a $300 prepaid card

• You checked your credit score on your bank’s mobile app

• You made your student loan payment on time

• You used your debit card at the grocery store

Struggling to pay off excess debt can lead to all of these consequences, EXCEPT...

• Developing health problems from the stress of carrying debt

• Having your wages reduced by collectors on unpaid debts

• Being fired from your job if your employer finds out you have too much debt

• Having purchases repossessed (home, vehicle, etc.) for failure to make payments

Which student is most likely to have the highest credit score?

• Henry has 3 credit cards with low balances and often forgets which one they need to make payments on and is late

• Debbie has 2 credit cards and they’re usually near their credit limit

• Leana has 3 credit cards that she pays in full every month and recently applied for a new line of credit

• Jacob has never had a credit card and has over $10,000 in his savings account

Which statement about predatory lending is TRUE?

• They have a federally-mandated maximum APR of 25%

• They disproportionately affect communities of color

• The terms of these loans are fair to all parties involved

• They were made illegal by the federal government over a decade ago

Why is it important to check your credit report regularly?

• To improve your credit score through frequent hard inquiries

• To identify potential errors or fraudulent activity

• To monitor the transactions on your credit card

• To automatically increase the credit limit on your revolving credit accounts

How is a secured credit card different from the far more typical unsecured credit card?

• A secured credit card is the same as a debit card, drawing money down directly from your checking account

• A secured credit card has interest rates far lower than those of a typical credit card

• A secured credit card requires the borrower put down a deposit to create their credit limit

• A secured credit card cannot be used to shop online, because you have to sign a receipt after every purchase

Joseph reviews his credit report and decides to put a “red flag” on it. What does that mean?

• New lenders will double-check Joseph’s identity before approving a credit application

• Joseph will not be able to open new lines of credit for at least 1 year

• The credit bureau has 30 days to resolve any errors in Joseph’s credit report

• Late payments will be removed from Joseph’s credit report for a fee

What is the highest FICO credit score you can obtain?

• 100

• 650

• 850

• 1000