Credit and Debt Practice Test

What happens to your debt when you frequently use your credit card?

• decreases

• remains the same

• increases

• disappears

How does installment credit differ from revolving credit?

• It is automatically renewed as debts are paid.

• It is paid back in fixed monthly payments.

• It has no principal on fixed payments.

• It is automatically renewed as debts are paid.

What type of credit is a credit card or personal line of credit?

• Principal credit.

• Collateral credit.

• Installment credit.

• Revolving credit.

Which of the following is not a characteristic of installment credit?

• Line of credit.

• Fixed payment.

• Repayment schedule.

• Fixed loan amount.

Which lender typically provides very short-term loans based on employment proof?

• Title lender.

• Bank.

• Payday lender.

• Credit union.

Which lender generally offers the lowest interest rates?

• Bank or credit union.

• Credit card company.

• Payday lender.

• Title lender.

Which type of credit source can lead to significant losses if you default on your payments?

• Credit card company.

• Bank or credit union.

• Payday lender.

• Title lender.

Which person's first credit card offer might present the most risk?

• Lucas whose card has a low credit limit for the first six months.

• Kelly whose card has an interest rate that rises over time.

• Jalen whose card allows carrying a balance monthly.

• Kylei whose card has no fees.

Which individual is least likely to face difficulties in securing a loan?

• Bryson with a credit score of 560.

• Desiree with a credit score of 600.

• Khalil with a credit score of 690.

• Abdiel with a credit score of 650.

Who is most likely to have the best credit score?

• Gary who pays off his credit card balance in full each month.

• Ethan was late on two car payments but paid them in full.

• Mohammed who filed for bankruptcy 10 years ago but has been making payments on time.

• Mrs. Morgan who defaulted on her student loan.