Managing Credit- Quiz

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

• Length of credit history and new credit inquiries

• Payment history and types of accounts

• Payment history and total debt

• Amounts owed and length of credit history

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...*

• Making more than the minimum required payment on her debt

• Taking extra shifts at work to increase her income

• Reducing spending by canceling some of her streaming subscriptions

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

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

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

• It generally has no impact on your financial situation

• Only consumers with high scores are approved for credit

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? *

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

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

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

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

Who tracks all of your credit information?*

• Consumer Financial Protection Board (CFPB)

• Credit reporting agencies (Equifax, Experian and TransUnion)

• Federal government

• 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?

• Snowball method

• Make minimum payments

• High rate method

• Consolidate multiple debts into one new loan

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

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

• A list of all of your financial accounts and balances

• Your preferred payment method to pay for fixing the error

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

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

• Paying your bills on-time

• Paying down balances on your credit card accounts

• Decreasing your utilization of credit

• Applying for multiple credit cards

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 highest balance

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

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

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

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

• You don't get penalized for late payments

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

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

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