Which of the following statements about credit scores does this bar graph support?

It is more difficult for young people to borrow because they have less payment history for a lender to rely upon

Credit scores tend to drop as you grow older because you are more likely to miss a payment at some point

When young people borrow, they are likely to have lower interest rates because their credit scores are lower

It is easier for young people to get loans at lower interest rates because they are likely to have never been late with a payment

Which of the following methods of getting your credit score would involve paying a fee?

Getting a score from myFICO.com

Checking your credit card or loan statement

Talking to a non-profit counselor

Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

Ask his parents to cosign a credit card or add him as an authorized user on their credit card

Always say "credit" when asked "credit or debit?" at a store

Any time he borrows money from a friend or family member, be sure to pay it back promptly

Take out some private student loans, even though he doesn't need them because he has grants and scholarships

Which of the following individuals or groups would be the LEAST likely to look at your credit score?

A bank representative who is helping you open a savings account

Someone interviewing you for a job

An insurance company reviewing your applicant for auto insurance

Frank and Jasmere are each shopping for a new car for themselves. Each will need a $20,000 loan that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?

Jasmere's monthly payment on the loan will be about $100 more than Frank's payment

Over the five year period, Jasmere and Frank will pay the same amount for the car loan

Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment

Lenders are not allowed to charge people different interest rates based on their credit scores

You have a credit card that you use regularly for small purchases with the goal of improving your credit score. Which strategy would have the GREATEST positive impact?

Use less than 30% of the credit limit and pay it off in full every month by the due date

Always carry a balance from month to month

Regardless of how much your balance is, make the minimum payment required on your credit card every month by the due date

Put the credit card in a drawer instead and don't ever use it

What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time?

Consolidate multiple debts into one new loan

Who tracks all of your credit information?

Credit reporting agencies (Equifax, Experian and TransUnion)

Consumer Financial Protection Board (CFPB)

What is the general timeline to establish your first credit score?

Six months after you first actively use your credit

As soon as you apply for a credit card or loan

Once you pay all of your credit balances in full

You find an error on your credit report: Your credit card account indicates that you are 60 days late on your payment but you have bank records indicating that you have always made on-time payments. What should you do FIRST?

Contact the credit card company to have them fix it

Contact the credit reporting agency

Wait a few weeks to see if it gets resolved

Call the police to report the possible identity theft

Which of the following things should you have ready when contacting a credit reporting agency to report an error on your credit report?

An explanation of the mistake and any evidence you have supporting your claim

Your preferred payment method to pay for fixing the error

A list of all of your financial accounts and balances

References from a non-family member vouching for your creditworthiness

Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?

Applying for multiple credit cards

Paying down balances on your credit card accounts

Decreasing your utilization of credit

Which best describes the Debt Snowball method for paying off debt?

Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance

Only make payments on your smallest debt first, then move on to your second smallest debt, and so on

Once your debt "snowballs" out of control, hire a certified credit counselor to help get your finances back on track

Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the highest balance

Which of these represents a potential consequence of neglecting to pay your federal student loans?

Wages or tax refunds can be garnished

What benefits do you receive by taking out a loan with a cosigner?

You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit

You don’t get penalized for late payments

You get a discount on future loans after this one is paid off

You automatically get the same credit score as the cosigner once the loan is paid off

You're paying your credit card bill and your student loan payment each month, but you're falling behind on your auto loan payment. Which friend's advice could have a NEGATIVE impact on your credit score?

Debbie says, "Stop making the credit card payment for a few months until you're caught up on the auto loan."

Joanie says, "Call the auto lender and see if you can negotiate a lower monthly payment or some other deal."

Angie says, "Pick up a second job for as long as it takes to accumulate enough money to make all your payments, even if it means losing time with friends and family."

Betty says, "Cut down to a bare bones budget, where your necessities and your debt repayments take first priority. Cut everything non-essential."

Which response best completes the sentence "It's best to begin establishing credit when you're young because ________" ?

You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card

Accessing credit only becomes more expensive as you get older

Negative marks on your credit report go away faster for younger borrowers

Credit scores are free for anyone under the age of 25

Review this partial credit report, and then choose the response below that accurately depicts the information on the report.

This borrower was 30 days late on their May 2015 payment

The borrower paid a $30 fee in February 2015

This borrower was never late with any of their credit payments

This borrower's most recent payment was $30

The amount you can charge to a secured credit card is limited by…

The amount of money you deposit into an account as collateral

The total amount of money across all your bank accounts

How long you’ve had an account with the bank

How can your credit score impact your financial well-being?

Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be

Only consumers with high scores are approved for credit

Consumers with low scores get lower interest rates on loans than those with high scores

It generally has no impact on your financial situation

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help

Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

Explore whether a free or non-profit credit counseling service could help

Which of the following is true about fixed and adjustable-rate mortgages?

Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan

Fixed-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

The two mortgages work the same way but are called different names depending if they come from a bank or a credit union

Which of these credit payback strategies would lead to the HIGHEST overall cost?

Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Paying off your credit card bill in full every month

Paying 20% of your credit card balance every month on time

Making the minimum payment (3% of your credit card balance) every month on time

Denise took out a payday loan for $300 in August. By February of the next year, she was able to pay back the loan, but she had spent a total of $750 doing so. What’s the most likely story of how this happened?

Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times

The minimum monthly payment for payday loans is usually only $10 or $15, so a lot of interested accumulated

Upfront, Denise knew there would be $450 of fees attached to the loan, but she took out the loan anyway

Denise not only paid the $300 she owed, but she prepaid an extra $450 in case she needs another loan in upcoming months

Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment while still having extra cash in her emergency fund. She expects the exact model car she’s looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow?

Put in $5000 for your down payment, and choose a loan with a long term length

Put in $0 for your down payment, and choose a loan with a short term length

Put in $2500 for your down payment, and choose a loan with a short term length

Put in $3500 for your down payment, and choose a loan with a long term length

Reading through a credit card’s Schumer Box, you see the APR for a specific card is set at 9.99% - 23.99%. Which statement is true?

Your APR will be within that range, depending on the strength of your credit history

When given a range of APRs like this, you can assume most cardholders pay the lowest rate listed

In this case, you want the highest APR in the range because you’ll earn more

The APR on credit cards is usually fixed, so it won't be adjusted as long as you are a cardholder

What is an advantage of using a credit card?

You can make an emergency purchase that you otherwise don’t have the money to pay for right now

It will not affect your credit score or credit history

Since it is tied directly to your checking account, it prevents you from spending money you do not have

If you need to carry a balance, the interest rates are generally quite low (less than 5%)

Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.

The 25 days after the end of the billing cycle is referred to as the grace period

If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest

If you pay your previous balance in full after the due date, the credit card company will not charge you interest

25 days is an exceptionally long period without paying a credit card bill

Select the statement below that accurately describes a characteristic of a credit card.

Making full payments on-time every month is the only way to avoid interest charges

You owe the same payment every month

You must have money deposited into a checking account to use the credit card for purchases

Which of the following statements is CORRECT about secured loans?

If the borrower does not make payments, the lender can repossess the item

They are a good choice to use for student loans

In the event of default, the borrower loses nothing except for the down payment

They usually have higher interest rates as compared with unsecured loans

An excellent credit score will help with which aspect of car financing?

Qualifying for a low interest rate

Bargaining for a great sales price

Having a wide selection of term lengths

As a young adult, all of the following are good strategies for building credit, EXCEPT:

Open a credit card, with your parent or guardian as a cosigner

Become an authorized user on a credit card used by your parent or guardian

Open and use a secured credit card

Amy and Chuck each buy a house in the same neighborhood for $250,000. Amy's monthly mortgage payment is $400 more per month than Chuck's. Which one of the following statements could explain this difference?

Amy chose a shorter term for her mortgage, so her monthly payments are higher

Amy made a larger down payment, so her monthly payments are also larger

Chuck chose a shorter term for his mortgage, so his monthly payments are also lower

Chuck has a lower credit score, so his interest payments are also lower

Why are payday loans so much easier to qualify for than traditional bank loans?

Payday loans require proof of employment or other regular income but not a credit check

Payday loans are only used by affluent households, and the banks know they have enough money to cover them

Payday loans are just another word for direct deposit, and almost all employers offer their employees direct deposit instead of a paper paycheck

Payday loans are typically for such small dollar amounts that no one cares if you repay them or not

Trudy tells her mom that she wants to buy a house within two years of graduating from college. Her mom says Trudy will need a down payment first. What is a down payment?

A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller

A specific type of tax advantaged bank account used for saving money to buy a house

The first year’s worth of property taxes, held in reserve

A prepayment to a real estate agent so that they will start helping you house hunt

Which of the following statements is true about this Schumer Box?

A 28.99% APR may be applied to your account for late payment

Depending on your creditworthiness, the APR for a borrower will always either be 8.99%, 10.99% or 12.99%

There is an introductory APR that is valid only for 1 year, but then the permanent APR is lower than that at 8.99%.

You will never be charged an APR higher than 14.99%

Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?

This enables the credit card company to make more money

This is required by federal law for tax purposes

This allows the card holder to pay their bill quickly and close the card when they’re ready

This helps cardholders develop financial independence

Unit 6: Managing Credit

Authored by Orville Hasty

Business

9th - 12th Grade

Used 7+ times

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MULTIPLE CHOICE QUESTION

30 sec • 2 pts

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

All 3 cards are completely different

Debit cards and prepaid debit cards are the same

Debit cards and credit cards are the same

All 3 cards are completely the same

MULTIPLE CHOICE QUESTION

30 sec • 2 pts

Reducing spending by canceling some of her streaming subscriptions

Taking extra shifts at work to increase her income

Making more than the minimum required payment on her debt

Applying for another credit card to use in case she runs out of cash paying off her debt

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Unit 6: Managing Credit

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

The average APR for a payday loan is closest to …

Which of the following statements comparing credit and debit cards is TRUE?

Which of the following is most likely to represent a fixed rate, secured debt?

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

What are the two most important factors in calculating your credit score?

Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…

Which of the following statements about credit scores does this bar graph support?

All of the following would show up on a credit report EXCEPT...

Which of the following methods of getting your credit score would involve paying a fee?

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