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Worksheets6.01 & 6.02: Credit Reports And Scores / Credit Basics
Total questions: 13
Worksheet time: 16mins
Edward wants to develop a positive credit history. How should he do this?
Maintain reasonable amounts of available credit
Have one type of credit account
Pay cash for the majority of purchases
Open credit accounts in his parents’ names
When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which best describes what this is likely to mean for Bryce?
The interest rates on his loan will be lower, since his credit score is low.
The purchase price of the item he needs the loan for will be higher due to his low credit score.
The monthly loan payments will be lower due to his lower credit score.
The interest rates on his loan will be higher, since his credit score is low.
Jake’s credit application has been declined because of his negative credit history. Which is most likely to be true?
Jake pays his bills consistently and on time.
Jake has applied for 4 credit cards and a car loan in the past 6 weeks.
Jake has received 3 traffic tickets in the past 2 months.
Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage.
Which is not an example of a data furnisher?
Landlord
Credit card company
Utility company
Medical provider
Which is not included in an individual’s credit report?
Current and past addresses
Account balances
Bankruptcies and foreclosures
Medical information
When may a person view his/her credit report for free?
At any time and an unlimited number of times
Once a year, from each of the three main credit reporting agencies
A person may not review his/her credit report
When a person has sufficient financial resources
Becky no longer wants to use her Clothes-R-Us store credit card. What is the best thing she could do with the credit card?
File the credit card away for use at a later time.
Let a family member take over the credit account so her credit score will not be affected.
Keep the credit card in her wallet in case she needs proof of identification.
Close the account by phone and in writing, then destroy the card.
Jenny is 18 years old and has applied for credit for the first time. Her credit application was declined because she has no credit history. What should be recommended in order for Jenny to build a positive credit history?
Jenny should acquire several credit cards to establish that she can manage them responsibly.
Jenny should obtain a secured credit card.
Jenny should reapply for the same credit but include a letter of recommendation from someone who knows her well and can vouch for her character.
Jenny should apply for a different type of credit. Since she was applying for a bank loan, she should apply for a credit card.
David earns $5,000 per month at his accounting job. He has a student loan payment of $120, a car loan of $300. Which statement is true?
David’s total credit payments are higher than the recommended amount for someone earning his income.
David’s student loan payment must be subtracted from his car loan payment to determine whether his overall credit payments are within the safe range.
David’s student loan payment is within the safe range but his car loan is not.
David’s credit payments are within the safe range for someone with his income.
Leah is trying to explain the difference between open-end and closed-end credit to her roommate. Which should she include in her description of closed-end credit?
It is a continuous loan the borrower must repay with a revolving balance.
Equal payments are required on a regular basis until the loan is repaid.
Credit limits vary depending on the loan balance.
Interest rates vary depending on the repayment history.
The financial counselor that Ariel consulted about her use of credit recommended that she keep her use of credit within safe boundaries. Ariel’s financial counselor most likely told her to:
keep the total amount of money she has borrowed, including her mortgage and her car loan, under 20% of her net income.
keep the total amount of money she has borrowed, including her mortgage and her car loan, under 40% of her net income.
keep the total amount of money she has borrowed, not including her house, under 20% of her net income.
keep the total amount of money she has borrowed, not including her house, under 40% of her net income.
Evan is writing a scholarship essay about the importance of responsible money management. He wants to explain the meaning of borrowing. Which would explain the importance of understanding the process of borrowing money?
When you are borrowing, you are spending future income.
Borrowing is an important part of a responsible financial plan.
Borrowing strongly affects the present self but has less impact on the future self.
Borrowing builds a strong credit history because it requires individuals to file a credit report.
To answer the essay test question about the meaning of open‐end credit, Ryan should include which statement?
A down payment must be made before receiving a loan.
Individuals are allowed to borrow an unlimited amount of money as long as they pay it back.
Credit is extended in advance so the borrower does not have to apply for credit each time credit is desired.
Payments are equal and required to be paid on a regular basis.
