Understanding the Costs and Benefits of Using Credit

What is one advantage of using credit cards mentioned in the passage?

• Convenience and ability to build credit history

• Low-interest rates

• Fixed repayment schedule

• No credit limit

What is the difference between revolving credit and installment credit?

• Revolving credit allows borrowing up to a limit and paying back over time, while installment credit involves borrowing a fixed amount and repaying in installments.

• Revolving credit has a fixed interest rate, while installment credit has a variable interest rate.

• Revolving credit requires collateral, while installment credit does not.

• Revolving credit is only available to businesses, while installment credit is available to individuals.

What are some common causes of personal bankruptcy mentioned in the passage?

• Excessive debt, medical expenses, and loss of income

• High credit scores, low debt levels, and stable income

• Frequent credit report checks, low-interest rates, and short credit history

• Good credit management, high savings, and low expenses

Which component is NOT part of a credit score according to the passage?

• Credit card rewards

• Payment history

• Debt to income ratio

• Length of credit history

What is a benefit of having a good credit score as mentioned in the passage?

• Better loan terms and lower interest rates

• Unlimited borrowing opportunities

• No need to check credit reports

• Guaranteed approval for all loans