Mastering Personal Finance Basics

Which of the following is most likely to improve your credit score in the UK?

• Missing monthly payments occasionally

• Paying your bills on time every month

• Frequently applying for new credit cards

• Using more than 90% of your credit limit

What is the main purpose of a credit score?

• To determine your annual income

• To assess your eligibility for government benefits

• To indicate your reliability in repaying borrowed money

• To calculate your tax liability

Which of the following is an example of unsecured debt?

• Mortgage

• Car loan

• Credit card balance

• Secured loan

If you are struggling to pay off multiple debts, which strategy is generally recommended to manage them effectively?

• Ignore the debts and hope they go away

• Pay off the debt with the highest interest rate first

• Take out more loans to pay off existing debts

• Only pay the minimum amount on all debts

Which of the following is considered a low-risk investment?

• Shares in a new technology start-up

• Premium Bonds

• Cryptocurrency

• Collectable art

What does the term ‘diversification’ mean in investing?

• Putting all your money into one type of investment

• Spreading your investments across different assets to reduce risk

• Investing only in foreign companies

• Selling all your investments at once

Which type of insurance would provide financial support if you were unable to work due to illness or injury?

• Home insurance

• Income protection insurance

• Pet insurance

• Travel insurance

What is the main benefit of having contents insurance?

• It covers the cost of repairing your car

• It protects your personal belongings against theft or damage

• It pays for private medical treatment

• It covers legal expenses in court

Which of the following is NOT a factor that can affect your credit score in the UK?

• Your payment history

• The number of credit applications you make

• Your shoe size

• The amount of debt you owe

If you invest £1,000 in a savings account with an annual interest rate of 3%, how much interest will you earn in one year (ignoring tax and compounding)?

• £10

• £30

• £300

• £3