Types of Credit Quiz

What is credit and how is it different from debit?

• Credit is the ability to lend money to others and charge interest on it.

• Credit is the ability to access goods or services with the understanding that you'll pay upfront.

• Credit is the ability to borrow money or access goods or services with the understanding that you'll pay later.

• Credit is the ability to borrow money or access goods or services with the understanding that you'll never have to pay it back.

How does credit differ from debit? Provide examples to illustrate your answer.

• Credit is when money is saved in a bank account, while debit is when money is spent from a bank account.

• Credit is when money is given as a gift, while debit is when money is borrowed.

• Credit is when money is borrowed and must be paid back, while debit is when money is taken directly from a bank account.

• Credit is when money is taken directly from a bank account, while debit is when money is borrowed and must be paid back.

Explain the concept of credit score and its importance.

• A credit score is a letter grade given to individuals based on their social media activity.

• A credit score is a measure of a person's physical fitness and health.

• A credit score is a number that represents the amount of money a person has in their bank account.

• A credit score is a numerical representation of a person's creditworthiness based on their credit history. It is important because it helps lenders determine the risk of lending money to an individual and can impact the interest rates and terms of loans and credit cards.

What factors can impact a person's credit score?

• Payment history, credit utilization, length of credit history, new credit, and types of credit used

• Favorite color

• Number of social media followers

• Number of pets owned

Why is it important to maintain a good credit score?

• To impress friends and family with a high credit score.

• To have a higher chance of winning the lottery.

• To qualify for loans, credit cards, and favorable interest rates.

• To qualify for free vacations and luxury items.