Managing Credit Unit Test2: Version A

What are the 2 Most important factors in calculating your credit score?

Select all that apply

• a. Payment history

• b. Types of Credit

• c. total debt/Credit Used

• d. Length of credit history

• New Credit Inquiries

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

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

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

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

• d. 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?

• a. Checking your credit card or loan statement

• b. Talking to a non-profit counselor

• c. Checking creditkarma.com

• d. Getting a score from myFICO.com

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

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

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

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

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

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?

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

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

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

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

Who tracks all of your credit information?

• a. Credit reporting agencies (Equifax, Experian and TransUnion)

• b. Federal government

• c. Consumer Financial Protection Board (CFPB)

• d. Lenders

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

• a. Snowball method

• b. Make minimum payments

• c. High rate method

• d. Consolidate multiple debts into one new loan

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?

• a. Contact the credit card company to have them fix it

• b. Contact the bank

• c. Wait a few weeks to see if it gets resolved

• d. 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?

• a. Your preferred payment method to pay for fixing the error

• b. A list of all of your financial accounts and balances

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

• d. References from a non-family member vouching for your creditworthiness

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

• a. You don't get penalized for late payments

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

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

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