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Chapter 4 Review: Credit and Debt

Total questions: 62

Worksheet time: 31mins

Name
Class
Date
1.

If a loan is not repaid, the ___________ of the borrower—used as security for the debt—could be sold by the lender.

a)

Equity

b)

Collateral

c)

Depreciation

d)

Credit Bureau

2.

A(n) _________ is a number that indicates the likelihood of someone repaying debt.

a)

Appreciating Asset

b)

Revolving Credit

c)

Term

d)

Credit Score

3.

A(n) ________ reports on a person‘s credit history.

a)

Equity

b)

Collateral

c)

Depreciation

d)

Credit Bureau

4.

The amount of time you have to pay back a loan is called the ___________ of the loan.

a)

Term

b)

Credit Score

c)

Installment Credit

d)

Lien

5.

When an item is worth less than what you owe on it, that‘s called _______________.

a)

Depreciating Asset

b)

Equity

c)

Collateral

d)

Depreciation

6.

Making fixed payments on a loan over a set period of time is an example of _____________.

a)

Revolving Credit

b)

Term

c)

Credit Score

d)

Installment Credit

7.

When an asset loses value over time, that‘s _____________.

a)

Depreciating Asset

b)

Equity

c)

Collateral

d)

Depreciation

8.

When you fail to repay a loan on time, you‘re referred to as being in ____________.

a)

Debt

b)

Principal

c)

Predatory Lender

d)

Default

9.

Which of these is not one of the main credit bureau reporting agencies?

a)

Identifax

b)

Equifax

c)

TransUnion

d)

Experian

10.

With a debit card, you can do everything you can do with a credit card except what?

a)

Rent a car

b)

Stay in a hotel

c)

Go into debt

d)

Fly on an airplane

11.

A clothing store credit card is an example of what type of debt?

a)

Revolving credit

b)

Installment credit

c)

Personal loan

d)

Lien

12.

Which of the following is not factored into the loan payment on a new car?

a)

Term

b)

Equity

c)

Interest

d)

Principal

13.

Predatory lenders use all of the following to prey on desperate people except . . .

a)

Unfair practices

b)

Deceptive tactics

c)

Truthful logic

d)

Fraudulent info

14.

Which of these is not a marketing tactic to get you to use credit?

a)

0% interest

b)

1.5% cash back

c)

Introductory offer

d)

50% off sale

15.

A fee a bank, credit card, or lender charges to purchase something & pay for it over time

a)

Dividend

b)

Interest

c)

Credit

d)

Finance Rate

16.

Car loans are just a way of life. You will always have a car payment.

a)

True

b)

False

17.

Staying away from car payments by driving used cars is what the typical millionaire does.

a)

True

b)

False

18.

When you buy things with cash, you will always pay more for the things you buy.

a)

True

b)

False

19.

The FICO score measures all of the following except:

a)

Debt History

b)

Savings Account Balanace

c)

Types of Debt

d)

New Debt

20.

Which of the following describes the best way to buy a car?

a)

Ask your parents to borrow money for the purchase

b)

Save up and pay cash for a used car in your price range

c)

Save up a nice down payment and finance the remaining cost

d)

Allow your grandparents to cosign your loan for a new car

21.

On average, over 70% of college students graduate with student loan debt.

a)

True

b)

False

22.

How can you go to college and not get a student loan?

a)

Scholarships

b)

Grants

c)

Scholarships and Grants and go to a Work Study Program

d)

Get good grades

23.

What is the debt snowball method?

a)

You pay largest to smallest

b)

You pay smallest to largest

c)

You pay average debt to larger debt

d)

Pay average debt to smaller debt

24.
Which of the following is NOT a step out of debt?
a)
Consolidate the debt
b)
Quit borrowing money
c)
Sell Something 
d)
Use the debt snowball method
25.
Your ability to borrow is based on the lender's belief that you will __________________. 
a)
repay your debt
b)
make more money
c)
extend your loan
d)
apply for another loan
26.
The ______________ is the length of the loan. 
a)
principal
b)
interest rate
c)
term
d)
APR
27.
How often should you check your credit? 
a)
every 6 months
b)
annually
c)
every 2 years
d)
no need to check your credit
28.
________________ is something of value you promise to give up as repayment if you cannot repay the loan. 
a)
collateral
b)
loan
c)
installment
d)
credit
29.
______________________ is/are repaid in set monthly payments. 
a)
Installment loans
b)
Credit cards
c)
IOU's
d)
Bankruptcy
30.
The number assigned to your credit score is your FICO score. 
a)
True
b)
False
31.
A _______________________ is an example of revolving credit. 
a)
Credit Card
b)
Student Loan
c)
Installment Loan
d)
Personal Loan
32.
The FICO scales ranges from ___________________________. 
a)
300-850
b)
0-850
c)
200-1000
d)
0-10
33.
People with the highest credit scores get the lowest interest rates. 
a)
True
b)
False
34.
Your credit score is determined by your income and age. 
a)
True
b)
False
35.
Your credit score is based on your ____________________. 
a)
Income
b)
Age
c)
Past use of credit
d)
College Education
36.
Which of the following is included in calculating your FICO score? 
a)
Your salary
b)
Your Gender
c)
Your Credit History
d)
Your Age
37.
The original money borrowed on a loan is called __________________________. 
a)
interest
b)
principle
c)
debt
d)
credit
38.

What does a credit score measure?

a)

How much money you have

b)

How well you pay off debt

c)

How well you budget your money

d)

When you can retire

39.

Who pays the highest interest rates on credit cards?

a)

Rich people

b)

Old people

c)

Young people

d)

Poor people

40.

Which is the 4th Foundation?

a)

Build Wealth and Give

b)

Pay Cash for College

c)

Get Out and Stay Out of Debt

d)

Pay Cash for a Car

41.

What is your greatest tool for building wealth?

a)

Your credit score

b)

Credit cards

c)

The stock market

d)

Your Income

42.

Which is the 3rd Foundation?

a)

Build Wealth and Give

b)

Pay Cash for College

c)

Get Out and Stay Out of Debt

d)

Pay Cash for a Car

43.

Which type of loan requires collateral?

a)

Unsecured loan

b)

Secured loan

c)

Revolving credit

d)

Installment credit

44.

Which is NOT part of the FICO score (credit scores)?

a)

Debt payment history

b)

Types of debt

c)

Your income level

d)

Amounts owed on debt

45.

Which is the 1st Foundation

a)

Build Wealth and Give

b)

Pay Cash for College

c)

$500 Emergency Fund

d)

Pay Cash for a Car

46.

Which of the following can you NOT do with a debit card?

a)

Rent a car

b)

Go into debt

c)

Book a hotel room

d)

Reserve airline tickets

47.

Making monthly payments on a car, but not owning the vehicle, is called:

a)

Repossession

b)

Renting

c)

Leasing

d)

Financing

48.

Why should you check your credit report?

a)

You shouldn't - unless you have debt

b)

To check for errors or fraud

c)

It's the law!

d)

To improve your credit score

49.

Which is the 5th Foundation?

a)

Build Wealth and Give

b)

Pay Cash for College

c)

Get Out and Stay Out of Debt

d)

Pay Cash for a Car

50.

Credit cards that offer fancy rewards usually:

a)

Charge annual fees

b)

Don't charge interest

c)

Only apply to rich people

d)

Can't be used for daily expenses

51.

Car leases usually charge a penalty if you:

a)

Drive too fast

b)

Leave the state

c)

Go over the mileage limit

d)

Get the car dirty

52.

Which is the 2nd Foundation?

a)

Build Wealth and Give

b)

Pay Cash for College

c)

Get Out and Stay Out of Debt

d)

Pay Cash for a Car

53.

The debt snowball method:

a)

Ignores the debt until you go bankrupt

b)

Pays off debt from smallest to largest

c)

Only works in the winter

d)

Pays of debt from largest to smallest

54.

Which of the following is an acceptable form of debt (according to Ramsey)?

a)

Payday loan

b)

Car loan

c)

Student loan

d)

Mortgage

55.

Predatory lenders take advantage of desperate people by:

a)

Charging interest for loans

b)

Selling their personal information

c)

Holding their children hostage

d)

Charging high fees to loan money

56.

When people go into debt, who benefits the most?

a)

Local businesses

b)

People who use credit cards

c)

Credit card companies and banks

d)

Stock market investors

57.

Which term represents the total amount of money owed on a car loan?

a)

Interest

b)

Sales Tax

c)

Principal

d)

Term

58.

What is a secured loan?

a)

A loan without collateral

b)

A revolving loan

c)

A loan with collateral

d)

A safe loan with no interest

59.

Lenders use credit agencies to determine:

a)

An applicant's credit score

b)

An applicant's credit history

c)

Whether an applicant has any outstanding debt or defaults

d)

All of the above

60.

Which is a disadvantage of a credit card?

a)

Credit cards are buy-now, pay later

b)

Credit cards provide preapproved credit

c)

Credit cards charge interest

d)

Credit cards are the best way to pay for something online, because you can dispute a the charge

61.

A credit card provides preapproved credit.

a)

True

b)

False

62.

The lower an applicant's credit score, the lower the risk to the lender.

a)

True

b)

False

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