WorksheetsUnit 8/9 Review - Credit
Total questions: 29
Worksheet time: 29mins
If you want a credit card for emergency use only, what should you look for in a credit card?
Good reputation and security
Accepted worldwide and customizable appearance
Low interest rates and fees
Large limits and reward programs
A person should choose a credit card based on the way he plans on using it. James intends to use a card for everyday purchases such as groceries, gasoline, and entertainment. He has good budgeting habits, and is confident he will pay off balances each month and mind credit limits. Given this information, which of the following would be the best factors to prioritize when deciding between cards?
Good reputation and security
Accepted worldwide and customizable appearance
Low interest rates and fees
Large limits and reward programs
What are the three major CRAs (credit bureaus) that maintain credit reports?
Equifax, TransUnion, Experian
Equifax, TransAmerica, Expedia
Expedia, the FTC, TransUnion
Experian, the FTC, Equifax
Given the fact that a credit card balance can change every day, which of the following best describes how interest is calculated?
Interest is calculated yearly using the total amount spent that year.
Interest is calculated monthly but only on the carry-over balances.
Interest is calculated monthly using the total amount spent that month.
Interest is calculated using average daily balances.
A person only gets charged interest if he doesn’t pay his balance in full each month.
True
False
CRAs only care about a person’s total overall credit usage and want it to be below 30 percent. They don’t care what the ratio is for individual accounts.
True
False
Which of the following is NOT a tip for responsible credit card use?
Find a card with no annual fee
Pay the minimum payment each month
Avoid high balances
Don’t use the card for cash advances
Who are credit card companies’ most profitable customers?
Customers who pay their full balances each month
Customers that never pay on time, if at all.
Customers that pay the minimum payment each month.
Customers that they have to send to a collection agency.
Shopping safely online consists of all of the following EXCEPT
Double checking the URL to ensure it is the intended site
Making sure the web address has an https
Only shopping on sites that have a lock icon in the address bar
Logging in to Paypal when using public Wi-Fi
Whose responsibility is it to prove the accuracy of items appearing on a credit report?
The CRA (credit bureau)
The vendor who reported it
The FTC (Federal Trade Commission)
The bank considering the report
Whose responsibility is it to report inaccuracies on your credit report?
The CRA (credit bureau)
The FTC (Federal Trade Commission)
Yours
Your bank's
If a person is denied credit by a lender, the lender must tell her why he/she was denied.
True
False
If a person is denied credit by a lender, the lender must provide her a copy of the credit report used in the decision to deny her.
True
False
Which contributing factor makes up the largest portion of a credit score?
Payment history (responsibility in paying on time)
Amounts owed (as a ratio of total credit available or borrowed initially)
Length of credit history (how long have you had each account)
New credit (inquiries to apply for new credit)
Types of credit used (mortgage, secured, unsecured, revolving, installment, etc.)
Which contributing factor makes up 15 percent of a credit score?
Payment history (responsibility in paying on time)
Amounts owed (as a ratio of total credit available or borrowed initially)
Length of credit history (how long have you had each account)
New credit (inquiries to apply for new credit)
Types of credit used (mortgage, secured, unsecured, revolving, installment, etc.)
Which contributing factor makes up 30 percent of a credit score?
Types of credit used (mortgage, secured, unsecured, revolving, installment, etc.)
Payment history (responsibility in paying on time)
Amounts owed (as a ratio of total credit available or borrowed initially)
Length of credit history (how long have you had each account)
New credit (inquiries to apply for new credit)
Jesse paid very close attention in his high school personal finance class and learned concepts he uses almost every day. He learned how to manage and build his credit. Which of the following practices is most likely helping his credit score the most?
He has a good mix of credit: one credit card, a car loan, and two student loans.
He made only one credit application every six months.
He pays off his credit card at the end of every month and never carries a balance.
All of his accounts are at least 3 years old.
He has never missed a payment or been late on a payment.
What is the maximum percent of revolving credit a person can use at once before damaging his/her credit score?
10%
15%
20%
30%
50%
What two pieces of information do lenders report to CRAs each month?
The amount of time a person has been in debt and the amount of money he still owes
Whether a person made his payment on time and how many payments he has made in total
The amount of money a person owes and whether he made his payment on time
The amount of money a person owes and the amount of debt he initially borrowed
If a person pays all of her bills on time, she doesn’t need to monitor her credit score.
True
False
Dawson recently had his identity stolen, which of the following would NOT be likely to happen as a result?
Someone might open a bank account in his name.
Someone might make a fake ID with his name and SSN, then commit a crime as Dawson.
Someone might be sent his tax return.
Someone might make purchases with his credit cards.
Someone might pay off all of his credit card debts.
Which of the following best describes the difference between a soft and hard credit inquiry?
A soft inquiry is one that occurs within ten days of another similar inquiry, whereas a hard inquiry is one that occurs by itself.
Hard inquiries occur when an entire credit report is pulled for the purpose of obtaining new debt, whereas soft inquiries occur when a financier looks only at a credit score.
A hard inquiry occurs whenever a credit score is generated, whereas a soft inquiry occurs when a lender looks at a credit report.
Although both are reported, soft inquiries help credit whereas hard inquiries hurt it.
How long do most negatives stay on a person’s credit report?
7 years
2 years
10 years
8-10 years
Every time a company looks at a person’s credit score, it is reported as an inquiry and lowers his credit score.
True
False
Mason has recently had a difficult time paying his bills. As a result, he skipped his January car payment to pay rent. In March, he worked hard to get back on his feet, and things have been smooth ever since. Which of the following is the best thing Mason can do to maximize his credit score?
He should keep paying his bills on time, and eventually things will rebound.
He needs to open new credit accounts to increase his credit limits.
He needs to make up the missed payment as soon as possible.
He has to wait seven years for the missed payment to fall off his report.
Nothing. One missed payment will not hurt his credit score.
Which of the following is a benefit of having a good credit score?
Your interest on loans and credit cards will be lower
You will get discounts at local stores
You will earn a higher salary
You'll get accepted to better education institutions
Credit cards can help _____________ when paid off on time regularly.
have many open credit cards
have credit monitoring
check your credit score every week
build credit history
Which of the following will NOT help you protect yourself from identity theft and fraud?
Waiting for someone to contact you
Freeze your credit.
Contact lenders and credit bureaus to address incorrect information.
Regularly monitor your credit report.
How does paying the minimum payment every month give credit card companies the most money?
Customers who never pay are their most profitable customers
Customers are on time every month and paying the most in interest
Customers are never able to pay off their debt
Customers are able to pay off their debt faster
