Credit: End of Unit Quiz

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

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

• B. A credit card with a 15% APR and the individual making minimum payments

• C. 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?

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

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

• C. 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

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

Which of the following is one of the main credit reporting agencies?

• Credit Reporting Alliance

• Experian

• Credit Karma

• Accreditation

Who can view a credit report to evaluate an individual's credit risk?

• Former employers

• Family members

• Pawn shops

• Insurance companies

What is one of the ways a good credit score can help your finances?

• A. A higher score can help you get a promotion

• B. It can increase your chance of winning the lottery

• C. You may be eligible for lower interest rates

• D. Your income will increase

What is one reason why you should review your credit report regularly?

• It is required by law

• It is required by employers

• To catch identity theft

• Doing so improves your credit score

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

• Type of credit used

• Length of your credit history

• Payment history

• Amount owed

Which of the following is a way to improve your credit score?

• Carry a balance on your credit card

• Always pay with cash

• Apply for additional credit cards

• Pay your credit card bill on time

Which is true about secured versus unsecured loans?

• Secured loans typically offer higher rates because there is little risk to the lender

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

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

• Unsecured loans typically have lower interest rates as lenders only make the loan if they are certain it will be repaid

Which two types of credit may require a down payment?

• A. Auto loans and mortgages

• B. Personal loans and credit cards

• C. College loans and auto loans

• D. Payday loans and mortgages