Credit and Borrowing Quiz

For an individual looking to borrow $1,000, which will lead to the lowest cost of borrowing?

• A payday loan that charges $15 a week for every $100 borrowed

• A personal loan with a 7% interest rate with a vehicle pledged as collateral

• A credit card with a 15% APR and the individual will make minimum payments

• A cash advance on a credit card that has a 29% APR and a 3% transaction fee

Alex received a credit card statement and sees a balance of $300 and a grace period of 20 days. Which of the following is true?

• Alex cannot make a payment for the next 20 days, and then the payment is due and the interest rate will change

• Alex has 20 days to make a payment and if Alex pays the entire balance in full, there will be no interest applied to the balance

• Alex can continue to spend for 20 more days until the account is closed

• Alex must make a payment now and wait 20 days for the payment to be processed before using the credit card

Which of the following is NOT a credit bureau?

• Experian

• Equifax

• TransUnion

• Accreditation

Who can view a credit report to evaluate an individual's risk and credit risk and use that information to make a decision?

• Insurance companies

• Potential loan providers

• Landlords

• All of the above

Maintaining a good credit score lets you enjoy lower interest rates, higher loan amounts, and an easier time getting credit approvals.

• True

• False

By reviewing a free copy of a credit report, individuals can ensure accuracy and monitor credit as good credit leads to improved terms of borrowing money.

• True

• False

What is the most important factor that can raise or lower an individual's credit score?

• Amount owed

• Type of credit used

• Length of your credit history

• Payment history

Which of the following is NOT a way to improve your credit score?

• Pay your credit card bill on time

• Close any credit card accounts that you aren’t actively using

• Review your credit card activity throughout the cycle to track your charges

• Spend more money to see what shows up on your credit card

Which is true about secured versus unsecured loans?

• Unsecured loans, like auto loans, typically offer higher rates as lenders only make the loan if they are certain it will be repaid

• Secured loans, like mortgage, typically offer lower rates as the lenders can take the home as collateral if the borrower defaults on a loan

• Secured loans, like credit cards, typically offer higher rates because there is little risk to the lender

• Unsecured loans, like payday loans, typically offer lower rates because there are few laws that govern them

Which two types of credit may require a down payment, which is used as a factor to calculate the loan-to-value ratio?

• Personal loans and credit cards

• College loans and auto loans

• Payday loans and mortgages

• Auto loans and mortgages