WorksheetsCredit Double Unit (NGPF)
Total questions: 39
Worksheet time: 39mins
Where do banks get the money to lend out to consumers?
From their clients' credit card accounts
From their clients' savings accounts and the Fed
From Kanye West
From their own money vaults
How do banks make money off of the credit they issue?
They charge a large, one-time fee at the start of the loan
They take out a small fee each month from your checking account
They charge a high interest rate on the loan
This is a trick question - they DON'T make money!
Which of the following is NOT a typical type of credit?
Mortgage
Automobile Loan
Credit Card
Pre-Paid Debit Card
Which of the following could be a SECURED loan? (hint: choose 2 correct answers)
Auto loan
Student loan
Mortgage
Overdraft
If the collateral for your secured loan can be taken away, why get a secured loan at all?
Because they usually have a higher interest rate
Because they usually have a lower interest rate
Banks give you an extra 90 days to make a missed payment
Banks typically don't charge interest for the first 12 months
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 balance
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
When can personal loans be a better option than credit cards? (hint: choose 2 correct answers)
If you want to earn rewards and enjoy travel benefits
If you want a lower interest rate
If you want purchase protection & warranties
If you need a lump sum of money right away
Which is TRUE about Payday loans?
You can pay them back in installments
You are charged a 1-time fee for the loan
Most people successfully pay these loans back
You need a credit card account to get one
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 is TRUE about an auto LOAN and a LEASE? (hint: choose 2 correct answers)
You must give the car back when a lease has expired
Only a loan requires some kind of upfront payment
You make monthly payments on both
Monthly payments tend to be lower with a lease
True or False: Landlords are required to submit your payment history, which can boost your credit score.
True
False
Which is FALSE about what can happen if you fail to make your mortgage payments?
After one missed payment, you can lose your home
You will be charged fees
Your credit score can take a hit
Foreclosure process starts after 30 days of missed payment
How do federal student loans differ from private student loans?
Fed loans have fewer and less flexible repayment options
Fed loans generally have higher interest rates
Private loan repayment may start while you're in school
Private loans don't require a cosigner, fed loans do
When repaying your Federal student loans...(hint: choose 2 correct answers)
repayment begins the day after you graduate
a loan servicer will contact you before repayment begins
you are required to begin with the Standard Repayment Plan
you can choose from different repayment plans
How are credit cards and debit cards different?
They're both linked to a checking account in different ways
Some debit cards say VISA on them; credit cards don't
With a credit card, you are borrowing from yourself
A credit card can offer perks such as purchase protection
How can you build a positive credit history as a college student?
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
Your net worth...(hint: choose 2 correct answers)
is what you owe minus what you own
is your assets - your liabilities
is your liabilities - your assets
is what you own minus what you owe
T/F: A negative credit event (bankruptcy) can have a WORSE impact on a higher credit score.
True
False
Which of the following is TRUE about a credit report?
It is a complete history of one type of credit you have
Credit reports are maintained by the 5 main credit bureaus
You can get a copy of your credit report for free
You can get a credit report only when you're 21 years old
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
All of the following are benefits of having a good credit score EXCEPT...(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 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
Aisha wants to improve her credit utilization rate. Which of the following can she do? (hint: choose 2 correct answers)
Make several payments in the month instead of a large one
Spread her spending among her 3 credit cards
Keep her credit utilization rate to 55%
Keep her spending all to 1 card; don't use the other 2
Why might someone have a thin file? (hint: choose 2 correct answers)
They've had multiple lines of credit open for 15 years
They only have 4 types of credit open
The credit bureaus mistakenly think you have passed away
You are relatively new to establishing credit
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
Where can you get a free copy of your credit report from all three agencies? It is the only site we discussed in class.
annualcreditreport.com
freecreditreport.com
getmycreditreport.com
creditreport.gov
Q13:Using the debt snowball method, you make...
minimum payments on all of your loans
one large payment on one loan
minimum payments on small loans; pay extra on large loans
minimum payments on large loans; pay extra on small loans
How can having a thin file impact you?
You are likely to get lower interest rates on your loans
You may be offered new lines of credit in the mail
Lenders may decline your application for a loan
Most landlords will approve you to rent an apartment or home
Using the High Rate Method, you...
pay off all your loans in the least amount of time
put extra money towards loans with the lowest interest rate
put extra money towards loans with the highest interest rate
make one large payment on the loan with the highest rate
Which types of debt usually CANNOT be erased or reduced?
Federal student loans
Credit card debt
Medical bills
None of these types of debt can be erased or reduced
What can debt collectors do if you don't make payments towards your loans?
Have you arrested if you owe money
They can try contacting you at work
Call you between 8am-9pm to talk to you about your loans
Reach out to your friends about the debt you owe
What information can you find on a credit report?
Your medical insurance information
Your parents' and siblings' contact information
Your education level
Inquiries you've made on new lines of credit
All of the following may access your credit report EXCEPT...
A landlord
A future employer
Colleges and universities
Insurance companies Insurance companies
Jim is 23 and has 1 credit card. What would be the best way to improve his credit score? (hint: choose 2 correct answers)
Get 4 more credit cards in the next 3 months
Diversify his credit - get an loan for the car he needs
Make sure he makes his payments in full & on time
Increase his credit utilization rate
