CSmith Economics Unit 5: Credit

Which of the following best describes credit?

• Credit is the use of your money to make more money

• Credit is purchasing power to buy investments

• Credit is borrowing money with the intent to pay it back with interest

• Credit is placing money into accounts with interest on top of the initial deposits

What makes a loan secured?

• Collateral is required before it is given

• APR is higher than average

• Term is shorter than average

• Interest is not charged within an initial introductory period

What can result in a lower APR on a loan?

• A lower credit score

• A higher credit score

• A smaller down payment

• A shorter term

What happens to a co-signer if the loan holder stops making payments?

• Their credit score drops

• They can be taken to bankruptcy court

• Their interest rates will go up on their current credit cards

• They will be charged a breach of contract fee

Which of the following is not included in calculating your credit score?

• Previous payments

• Length of credit use

• Number of lines of credit open

• Current income

Which of the following loan agreements is the BEST in terms total money paid on the overall loan?

• 12% over 72 months, $650 a month

• 5% over 72 months, $450 a month

• 12% over 48 months, $850 a month

• 5% over 48 months, $650 a month

Which of the following is NOT a type of credit that counts towards your credit history?

• Payday loan

• Loan from local non-bank lender (loan shark)

• Credit card fully paid off every month

• Mortgage loan

What does your credit score measure?

• How likely you are to be charged late fees

• How likely you are to repay the money borrowed on time

• How likely you are to have late payments

• How much interest you will pay each month on the money borrowed

Which of the following is NOT impacted by your credit score?

• Admission to higher learning institutions

• Rental agreement approval

• Hiring for certain jobs

• Future loan terms

Which of the following actions would have the biggest impact on your credit score?

• A paid off loan

• A missed payment

• A new loan opened in your name

• A closed account at a bank or credit union