Copy Unit 5 Quiz: Credit

Banks and lenders use credit scores to determine . . .

• The likelihood someone is able to repay debt
• A person's future outlook
• How much collateral someone has available to put up for a loan
• How successful someone is

_____________ require the borrower to put up collateral for the loan

• Unsecured loans
• Interest rates
• Revolving credit
• Secured loans

Which of the following is part of the formula that determines a person's credit score?

• Their income level during a one year period
• The percent of income that they invest into mutual funds
• The dollar amount in their savings funds
• Their history of payments made to lenders

Which is an example of an appreciating asset?

• A computer used for business purposes
• A new car purchased within the past 6 months
• A piece of farming equipment
• A home

What is the best way to avoid falling into debt?

• Use credit to pay for large expenses now so that you have plenty of time to pay it off
• Only buy things that you can purchase with cash, or whose balance you can pay off in full every month
• Use airline miles earned through a credit card to help pay for a vacation
• Take out a small loan for any purchases over $1,000