U3 L2: Credit

What is an agreement between a lender and a borrower, where the borrower promises to repay the lender at a later date, generally with interest?

• A lease agreement

• A credit agreement

• A purchase order

• A rental contract

What is the percentage of the money loaned that is paid to the lender by the borrower over time?

• Principal

• Interest rate

• Down payment

• Loan term

Which factor affects your credit the most according to the infographic?

• Types of credit in use

• New credit

• Payment history

• Length of credit history

What does APR stand for in the context of credit cards?

• Annual Percentage Rate

• Annual Payment Rate

• Annual Penalty Rate

• Annual Premium Rate

Why are students and young people often considered higher-risk customers for credit cards?

• Due to their short credit history or low income

• Because they have high savings

• Because they have stable jobs

• Due to their high spending habits

What is the range of a credit score that is considered "Excellent"?

• 661-780

• 781-850

• 500-600

• 300-459

What factors are credit scores based on?

• Number of open accounts, total levels of debt, and repayment history

• Age, income, and employment status

• Education level, marital status, and number of dependents

• Location, gender, and credit card type

How is purchasing power an advantage of using credit?

• It allows you to buy more than you can afford at the moment.

• It decreases your overall debt.

• It limits your spending to cash only.

• It reduces interest rates on loans.

What is the difference between a credit report and a credit score?

• A credit report is a number, while a credit score is a detailed history.

• A credit report is a detailed history, while a credit score is a number.

• Both are the same and interchangeable.

• A credit score includes personal information, while a credit report does not.

How do lenders use credit scores?

• To determine loan interest rates

• To decide your employment status

• To set your monthly budget

• To calculate your taxes