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WorksheetsPBMF Ch 16 Credit
Total questions: 47
Worksheet time: 25mins
Property that secures the loan is
capital
collateral
character
capacity
The cost of borrowing money is referred to as
Interest
Principal
Credit
Credit Line
A number that measures an individual's credit risk and ability to pay debts
credit report
credit score
annual fee
APR
The simple interest formula is I=PxRxT. What does the T represent?
term
test
Time
type of credit
The highest possible FICO score is
800
750
850
1000
Loan repaid with interest in a series of payments which are all the same
Credit card
Secured
Installment
Promissory note
The party receiving credit is known as the ______________.
creditor
debtor
principal
credit agency
Credit loans that require collateral are known as ________.
secured credit
unsecured credit
open-end credit
installment loans
Perhaps the greatest disadvantage of using credit is the temptation to overspend.
True
False
Using a credit card, such as Visa or MasterCard, is an example of closed end credit.
True
False
When paying an installment loan, portion of each payment is for interest while the remaining amount is applied towards the __________________________ balance.
principal
interest
interest rate
loan term
Initially, a large portion of each payment is devoted to __________________________.
interest
the principal balance
loan term
interest rate
If you have an amortized loan, your monthly payment will be______________________________.
always the same
always different
sometimes the same
never the same
As the loan matures, larger portions go towards paying down the ___________________________.
principal balance
interest
interest rate
loan term
Which type of loan would have the HIGHER interest rate?
Secured
Unsecured
Which of the following situations is an example of responsibly taking on debt?
Get a credit card but don't use it to avoid more debt
Spend up to your credit limit each month
Become an authorized user on an adult's card
Make only the minimum payment each month
Which of the following does NOT contribute to your credit score?
Your payment history
Which banks issued your credit cards
Your debt-to-credit ratio
Length of credit history
How are a credit score and credit report related?
A credit report is determined by the factors in your score
A credit score is determined by the factors in your report
Credit reports are less important than your credit score
They're not related at all
If you are 16 can you get a credit card
Yes, with your parents permission
No you must be 18 and have a co-signer
No you must be 25 years old
Yes, if she has a job
If you only pay the minimum on a credit card every month what will happen.
You will avoid all interest charges
Make the final amount you paid for your items much higher than you originally were charged for them
Minimum payments will help you have a plan to pay it off in a decent amount of time.
You will never pay the debt off
Payment history accounts for around _______ of your credit score.
1/2
3/4
35%
90%
Which of the following could be a SECURED loan? (hint: choose 2 correct answers)
Auto loan
Student loan
Mortgage
Overdraft
What may NOT impact the interest rate on your loans?
Your relationship with the financial institution
Your credit score
The loan amount
Your level of education
True or False: A cosigner's credit history can be affected by the loan they are cosigned on.
True
False
Why does the amount of INTEREST you owe on a loan decrease over time?
The institution trusts you more, so they lower the interest
With each payment, principal increases; so interest lowers
Banks are legally required to lower interest rates over time
With each payment, principal decreases, so interest lowers
What information on a Schumer Box should you focus on when choosing a credit card? (hint: choose 3 correct answers)
The term of the credit card
Annual Percentage Rate (APR)
Grace Period
Fees
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment over time
Pay interest 1st, then pay what you can on leftover balance
Always make the full payment on time
Pay the principal 1st, then pay what you can on interest
Which is TRUE when you make only the minimum payment each month?
You are charged interest on the remaining balancee
Your credit line is restored to its maximum amount
Credit card companies have permission to sell your information
It is the fastest way to pay off your debt
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, less
lower, more
higher, more
lower, less
Which of the following does NOT contribute to your credit score?
Your payment history
Which banks issued your credit cards
Your credit utilization rate
Length of credit history
All of the following are benefits of having a good credit score...(hint: choose 2 correct answers)
You can get a higher return on your Retirement fund
Higher interest rate on credit cards and loans
Easier approval for rental apartments and houses
Better car insurance rates
Which of the following is TRUE about finding errors on your credit report?
You may have to file a dispute with each credit bureau
You should wait until the end of the month before reporting
Finding errors is common & is not a big deal
Overlooked errors may result in you paying a fine
How are a credit score and credit report related?
A credit report is determined by the factors in your score
A credit score is determined by the factors in your report
Credit reports are less important than your credit score
They're not related at all
Jim is 23 and has 1 credit card. What would be the best way to improve his credit score?
Get 4 more credit cards in the next 3 months
Diversify his credit - get a loan for the car he needs
Make sure he makes his payments in full & on time
Increase his credit utilization rate
How much is a typical minimum payment on a credit card?
1-3% of the balance due
50% of the balance due
Any amount you can afford to pay that month
At least $200
