Worksheets25 Credit and Finance Quiz -A
Total questions: 34
Worksheet time: 1hrs 29mins
Credit is the present use of future income that allows consumers to ________.
purchase goods and services
save more money
A Finance charge is the total amount a borrower must ________.
save before borrowing
pay back in addition to the borrowed amount
Interest is the price paid for the ________.
use of money
borrowing books
APR stands for Annual Percentage Rate, which is the rate of interest a borrower would have to pay to use a given amount of money for ________.
(a)A Grace period is the number of days allowed to make a payment without incurring any ________.
interest
reward
A Revolving charge account allows customers to pay for purchases in full each month or ________.
pay a fixed amount each month regardless of the balance
carry over a balance with interest
An Installment account is used to charge expensive items such as a major appliance or piece of furniture. The buyer pays for the merchandise according to a set ________.
down payment
schedule
Collateral is something of value held by the creditor in case you are unable to repay the ________.
(a)A Cosigner is a responsible person who signs a loan agreement with the borrower. By signing the agreement, the cosigner promises to pay the loan if the ________.
borrower repays the loan in full
borrower defaults on the loan
Equity is the difference between how much is owed on something and how much that item is ________.
borrowed
Creditworthiness is the assessment of a borrower’s ability to repay a loan. Creditors consider people who have jobs with steady incomes as good credit risks. They also look for factors such as:
Amount of outstanding debt
All of the above
A Credit report is a summary of how a person or business has ________.
written to a creditor
Which of the following best describes the difference between using cash and credit to make a purchase?
There is no difference between using cash and credit.
Using cash means paying directly from your own funds, while using credit involves borrowing money to be repaid later.
Name four types of credit available to consumers.
Stocks, Bonds, Mutual funds, Exchange-Traded Funds
Mortgage loans, Personal loans, Credit cards, Payday loans
What is the purpose of a credit bureau?
To provide personal loans
To collect and maintain individual credit information
What are the 3 major credit bureau reporting agencies?
Experian, PayPal, Visa
Equifax, Experian, TransUnion
What information is usually found in a credit report?
Personal identification information
Internet browsing history
What three factors determine the amount of finance charges that will be paid for using credit?
Loan amount, unemployment, and annual income
Annual percentage rate, amount financed, and loan term
What is a drawback from having a cosigner?
Increases the loan amount you can borrow
Puts the cosigner's credit at risk if payments are missed
What does the concept of debt-to-income ratio signify?
The financial stability of an individual
The ratio of an individual's debt payments to their overall income
Describe the purpose of stating a person's inability to pay his or her debts with the term "bankruptcy."
To apply for a new credit card
To legally declare the inability to pay off debts
What four questions should you ask yourself before using credit?
How bad do I want it? What is the APR? What are the late fees? Is it special?
Can I afford it? Do I need it? What are the terms? Can I pay it off?
How does debt-to-income ratio affect whether someone has a good credit rating?
Higher ratio means better credit rating
Lower ratio is favorable for a good credit rating
Why is it important to take action right away if you find yourself having problems paying your bills?
It reduces the total amount you owe
It helps avoid late fees and additional interest charges
How do credit counseling services help debtors handle credit problems?
By providing legal advice
By negotiating with creditors to lower interest rates
Which of the following best describes the difference between Chapter 7 bankruptcy and Chapter 13 protection?
Chapter 7 allows for debt repayment plans, while Chapter 13 involves liquidating assets to pay off debts.
Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows for debt repayment plans.
What is the highest debt-to-income ratio do banks generally allow borrowers when purchasing a home?
36%
65%
What are the implications if two roommates sign a lease and one of the roommates stops paying their portion of the rent?
Remaining roommate is responsible for all the rent or they could be evicted!
No implications .
People should have control over their ability to pay their bills on time.
True
False
What are possible reasons why people don’t pay their bills on time?(choose 3)
Forgetfulness
Sufficient funds
Got fired
Spent all their money
What are the negative effects of not paying your bills on time?
You have money to spend
Increased debt and possible late fees
What are the positive effects of not paying your bills on time?
None
Rewards from creditors
Which type of charge account has variable monthly payments and available credit?
Installment account
Revolving charge account
Three Cs of Credit are:
Credit, Cash, Coin
Character, Capacity, Capital
