Understanding Credit Basics Quiz

Which of the following is an example of revolving credit?

• Mortgage loan

• Credit card

• Car loan

• Student loan

What does a credit score primarily measure?

• Your annual income

• Your ability to repay borrowed money

• Your total assets

• Your age

Which type of credit has a fixed number of payments over a set period?

• Revolving credit

• Installment credit

• Open credit

• Variable credit

What is the main difference between fixed-rate and variable-rate credit?

• The amount borrowed

• The interest rate changes or stays the same

• The length of the loan

• The type of lender

Which of the following is NOT a factor in calculating a credit score?

• Payment history

• Amounts owed

• Favorite color

• Length of credit history

What does amortization refer to in the context of loans?

• Increasing your loan balance

• Paying off a loan over time with regular payments

• Skipping payments

• Borrowing more money

When selecting a credit card, which feature should you consider first?

• Card color

• Interest rate (APR)

• The bank’s logo

• The card’s weight

Which of the following is an example of a fixed-rate loan?

• Adjustable-rate mortgage

• 30-year fixed mortgage

• Credit card

• Payday loan

What is the first step in buying a car with credit?

• Sign the loan agreement

• Check your credit score

• Make monthly payments

• Register the car

If you want to minimize interest paid on a credit card, which strategy should you use?

• Pay only the minimum payment

• Pay the full balance each month

• Skip payments occasionally

• Use the card for cash advances