PRSFINRSP Unit 5 Credit & Borrowing

What is the best definition for a creditor?

• a bank
• a person or company that provides money to another person or company to be repaid in the future, usually for a fee
• a retailer
• a person who borrows money from someone else

What is a secured loan?

• a car loan
• a store credit card
• a home equity line of credit
• a student loan

What is an example of secured revolving credit?

• a store credit card
• a personal car loan
• a collateral loan
• a home equity line of credit

How does increasing your credit card balance affect your net worth statement?

• It decreases your debt, and so raises your total net worth.
• It decreases your debt, and so lowers your total net worth.
• It increases your debt, and so raises your total net worth.
• It increases your debt, and so lowers your total net worth.

What is a budget?

• It is an invoice for expenses
• It is a listing of what an individual owns minus what they owe.
• It is a listing of an individual’s net income minus their expenses, calculated on a monthly basis
• It is a spending plan based on income and expenses.

Which of the following is a factor in determining someone’s capacity?

• whether they own anything of value close to the value of the loan
• the amount they owe on their credit cards
• the amount they owe on their credit cards
• the amount of money they have in savings

What are Equifax, Experian, and TransUnion?

• three factors in determining a person’s credit score
• three factors in determining a person’s ability to repay a loan
• just three of the many companies that provide credit reports on individuals
• the three major companies that provide credit reports on individuals

Which of the following is not likely to be someone’s credit score?

• 420

• 630

• 840

• 210

What do Equifax, Experian, and TransUnion do?

• determine individuals’ credit scores
• match lending companies up with individual borrowers
• compile credit reports on individuals
• provide borrowers with information on lending companies.

There are late payments on your credit report. There is a good reason you missed those payments — a reason that is unlikely to occur again. What should you do?

• Be sure to explain the reason the next time you apply for credit.
• Publish a notice in the local credit card bank explaining the reason.
• Attach a personal statement to your credit reports.
• Take out a different credit card with lower interest.