Credit & Debt Unit Test Review

Each of the following financial products will help you build credit history EXCEPT:

• Secured credit card
• Debit card
• Home mortgage
• Credit card

What statement about credit cards is TRUE?

• They can help you establish a credit history
• Since they are tied directly to your checking account, they prevent 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%)
• As long as you make the minimum payments it's like getting a short-term interest free loan

Based on the Card Statement, which of the following statements is TRUE?

• The cardholder is carrying a balance over from the last period.
• The cardholder was charged interest on her balances for the last period because she made her payment on time.
• If the cardholder makes her minimum payment of $35.00 by the due date, she will NOT be charged interest on her balances.
• If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.

Based on the Card Statement, how much credit does this cardholder have available to use?

• $0
• About $500
• About $1600
• $2100

Which of the following would NOT appear on a credit report?

• Salary of your current job
• Payment history of your car loan
• Credit card payment history
• Student loan activity

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

• Cancel his credit cards
• Make on-time payments
• Get a car loan
• Check his credit score

How can your credit score impact your financial situation?

• Consumers with high scores can borrow and those with low scores cannot
• Consumers with low scores get lower interest rates on loans than those with high scores
• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
• It generally has no impact on your financial situation

Which of the following could have a NEGATIVE impact on your credit score?

• Paying your bills on-time
• Paying down balances on your credit card accounts
• Decreasing your utilization of credit
• Applying for multiple credit cards in a short period of time (e.g., a week)

What three main factors are used to calculate your credit score?

• Your income, debt, and monthly expenses
• Your payment history, money owed, and credit history
• Your earning potential, income taxes, and monthly expenses
• Your payment history, annual income, and total debt

The grace period refers to the time:

• taken to process a credit card application
• for paying an account without an interest charge
• allowed to notify a creditor of a billing error
• used for calculating interest