Types and Managing Credit - Test Review

What is a credit score?

• A measure of income

• A number indicating creditworthiness

• A type of loan

• An expense report

Which of the following is NOT a factor in calculating a credit score?

• Payment history

• Credit utilization

• Employment history

• Length of credit history

Which type of credit allows you to borrow up to a certain limit and pay interest only on what you use?

• Installment credit

• Revolving credit

• Secured credit

• Debit card

What is an installment loan?

• A loan repaid in regular payments over a period of time

• A line of credit with a variable interest rate

• A loan secured by collateral

• A loan with no repayment required

What does a secured credit card require?

• A high credit score

• A security deposit

• A co-signer

• Monthly income verification

Which of the following is a benefit of having a good credit score?

• Higher interest rates

• Lower interest rate offers, therefore, generally less expensive borrowing costs

• Fewer credit card options

• More frequent credit checks

Which type of credit report item is most damaging to your score?

• Hard inquiries

• Missed payments

• Credit utilization

• Length of credit history

What is the primary purpose of a credit bureau?

• To issue credit cards

• To provide loans

• To collect and report credit information

• To set interest rates

What is a credit limit?

• The amount of credit available to a borrower

• The interest rate on a loan

• The minimum payment due

• The total amount of debt

Which of the following actions can help improve your credit score?

• Closing old credit accounts

• Making late payments

• Keeping credit utilization low

• Applying for multiple credit cards at once