Credit Knowledge Quiz

What is credit?

• Buying something and paying immediately

• Borrowing money and promising to pay later

• Earning money through investments

• Saving money in a bank account

Before giving someone credit, what do lenders do?

• Check the person's bank balance

• Determine the person's credit risk

• Offer a loan without any checks

• Ask for a personal reference

What does a good credit rating allow a borrower to do?

• Borrow less money

• Borrow money at a higher interest rate

• Borrow money cheaper and more easily

• Avoid paying back loans

Besides borrowing money, what are two other reasons why a good credit rating is important?

• It helps in getting a job and buying groceries

• It is used by landlords and car insurance companies

• It allows for tax deductions and free travel

• It provides discounts on utilities and phone bills

What happens when your credit points are added up?

• They are converted into a credit limit

• They are converted into a rating

• They are used to calculate taxes

• They are used to determine your salary

What is the purpose of a credit rating?

• To determine your age

• To measure your credit risk

• To calculate your monthly expenses

• To assess your educational qualifications

What are the five areas that are measured and determine a person’s credit score?

• Payment history, how much you owe, length of credit history, new credit, types of credit

• Income, savings, investments, expenses, debts

• Employment history, education, age, location, income

• Spending habits, savings, debts, income, expenses

In the “how much you owe” category, what will a person earn points for?

• Having a high credit limit

• Owing more than the credit limit

• Owing less than the available credit

• Having multiple credit cards

In the “length of your credit history” category, how does a person earn points?

• By opening new accounts frequently

• By having a longer history of using credit responsibly

• By closing old accounts

• By having a short credit history

What does the credit score range of 661-780 indicate?

• Excellent Credit

• Good Credit

• Fair Credit

• Poor Credit