Financial Literacy Final Exam Review

1. What are the two most important factors in calculating your credit score?

• Payment history and types of accounts
• Amounts owed and length of credit history
• Payment history and total debt
• Length of credit history and new credit inquiries

2. Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…

• Reducing spending by canceling some of her streaming subscriptions
• Taking extra shifts at work to increase her income
• Making more than the minimum required payment on her debt
• Applying for another credit card to use in case she runs out of cash paying off her debt

3. How can your credit score impact your financial well-being?

• Only consumers with high scores are approved for credit
• 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

4. Frank and Jasmere are each shopping for a new car for themselves. Each will need a $20,000 loan that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?

• Over the five year period, Jasmere and Frank will pay the same amount for the car loan
• Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment
• Jasmere's monthly payment on the loan will be about $100 more than Frank's payment
• Lenders are not allowed to charge people different interest rates based on their credit scores

5. Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?

• Paying your bills on-time
• Paying down balances on your credit card accounts
• Decreasing your utilization of credit
• Applying for multiple credit cards

6. Which of these represents a potential consequence of neglecting to pay your federal student loans?

• Wages or tax refunds can be garnished
• Passport revocation
• Driver’s license suspension
• Termination from your job

7. What benefits do you receive by taking out a loan with a cosigner?

• You don’t get penalized for late payments
• You get a discount on future loans after this one is paid off
• You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit
• You automatically get the same credit score as the cosigner once the loan is paid off

8. Review this partial credit report, and then choose the response below that accurately depicts the information on the report.

• The borrower paid a $30 fee in February 2015
• This borrower was never late with any of their credit payments
• This borrower's most recent payment was $30
• This borrower was 30 days late on their May 2015 payment

9. All of the following would show up on a credit report, EXCEPT...

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

10. Which of the following statements comparing credit and debit cards is TRUE?

• Far more businesses accept credit cards than debit cards
• Credit cards pull money directly from your bank account, while debit cards get their money from Visa and Mastercard
• Credit card companies provide you with a monthly statement, while debit cards do not
• With debit cards, you are spending your own money, but with credit cards you're getting a loan that you need to pay back later