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WorksheetsMANAGING CREDIT UNIT TEST
Total questions: 50
Worksheet time: 26mins
The two most important factors in calculating your credit score.
Payment History
Total Debt
The balance in your checking account.
All of the following would show up on a credit report EXCEPT...
Student loan activity
Credit card payment history
Payment history of your car loan
Salary of your current job
The single best way to improve your credit score is?
Make on-time payments.
Avoid paying your credit card bill if the balance is too high.
Which of the following individuals or groups would be the LEAST likely to look at your credit score?
Someone interviewing you for a job
Credit card companies
An insurance company reviewing your applicant for auto insurance
A bank representative who is helping you open a savings account
Credit reporting agencies (Equifax, Experian and TransUnion)
Track all your credit information.
Sell Bitcoin
You find an error on your credit report: Your credit card account indicates that you are 60
days late on your payment but you have bank records indicating that you have always
made on-time payments. What should you do FIRST?
Call your bank
Contact the credit card company to have them fix it
Cut up your credit card
The amount you can charge to a secured credit card is limited by...
The amount of money you deposit into the account as collateral.
The number of items you can fit in the shopping bag.
What is the high rate method for paying off debt?
A strategy to pay off multiple sources of debt if you want to pay the
lowest amount of interest over time.
The strategy is to pay off multiple sources of debt if you want to pay the lowest balance item first.
What is the general timeline to establish your first credit score?
6 months after you first actively use credit.
The first day you get a credit card.
1 year after your first loan.
A key factor influencing credit scores is:
Recent inquiries
Monthly expenses
Martial status
Education level
All of the following are part of a credit report EXCEPT:
Spending Habits
Loan Repayment
Credit Limit Utilization
Current Credit Inquiries
A cosigner on a loan can help by:
Reducing monthly payments
False
Boosting approval odds
Offering collateral for the loan
Establishing credit early can help with:
Quick loan approvals
Higher credit card limits
Avoiding yearly credit checks
Getting better interest rates
The main advantage of a secured credit card is:
Higher spending limits
Reduced annual fees
Improving credit score
Earning cashback rewards
Why might older individuals typically have higher credit scores?
They have had more time to accumulate wealth
They have longer credit histories
They always earn more than younger individuals
They have longer credit histories
How often should you check your credit report for errors?
Only when applying for a major loan
Once a decade
At least once a year
Every month
When applying for a loan, why might a lender be interested in your credit score?
To determine if you actually need a loan
To set the loan's interest rate and terms based on risk
To know how much money you have in your bank account
To sell your personal information to third parties
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 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
How long does a bankruptcy typically remain on a credit report?
3-5 years
7-10 years
12-15 years
Indefinitely
What does credit measure?
How likely someone is to pay back a loan
How well someone has made payments in the past
How trustworthy someone is with money
All of the above
What is a loan term?
The amount of time a revolving line of credit can be open
The payment of income to a savings account in regular payments over a set period of time.
The period in which the loan is to be repaid, each payment broken down into individual installments
Specifically related to the black market for human organs, and typically meant as the length of time one's kidney will be used for other purposes
A method of debt repayment whereby the borrower prioritizes paying down debts with the smallest balances first
Credit
Credit Score
Debt Snowball Method
FICO Score
A measurement of your outstanding debt divided by your total available credit
Bankruptcy
Credit History
High Rate Method
Credit Utilization Rate
A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report
Credit Score
High Rate Method
Bankruptcy
Credit History
A document containing an individual's financial information focusing on payment of their credit obligations over time
Net Worth
Thin File
Credit
Credit Report
A record of a person's use of credit over time; your credit history plays an important role in determining your credit score
Credit Score
Credit History
Collections
Credit Report
A company that collects and sells information about how individual people manage their credit (e.g. Equifax)
Annual Percentage Rate (APR)
Credit Bureau
Collections
Credit HIstory
An agreement in which a borrower receives something of value now and agrees to repay the lender in the future, generally with interest
Credit Score
Credit
Annual Percentage Rate (APR)
Credit Bureau
Attempted recovery of a past-due credit obligation or debt by a collection department or agency
Net Worth
Credit Bureau
Collections
Debt Snowball Method
A method of debt repayment whereby the borrower prioritizes paying down debts with the highest interest rates first
Bankruptcy
Credit Bureau
High Rate Method
Credit History
Long-term failure to repay a loan according to the terms agreed to, which has a substantial negative impact on the borrower's credit score
Bankruptcy
Collections
Default
Debt Snowball Method
A legal proceeding carried out to allow individuals or businesses freedom from their debts, while simultaneously providing creditors an opportunity for repayment
Bankruptcy
Trial
Summons
Money Divorce
What is the importance of making payments on time?
To maintain a good credit score, avoid late fees and penalties, and build trust with creditors.
To ensure that your financial obligations are met, avoid legal consequences, and demonstrate responsibility in managing your finances.
To receive discounts and rewards for timely payments, avoid negative marks on your credit report, and maintain a good relationship with creditors.
To improve your credit score, avoid late fees and penalties, and establish a positive payment history.
Which response best completes the sentence 'It's best to begin establishing credit when you're young because' ? *
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card
Accessing credit only becomes more expensive as you get older
Negative marks on your credit report go away faster for younger borrowers
Credit scores are free for anyone under the age of 25
Review this partial credit report, and then choose the response below that accurately depicts the information on the report. *
The borrower paid a $30 fee in February 2015
This borrower was never late with any of their credit payments
This borrower's most recent payment was $30
This borrower was 30 days late on their May 2015 payment
When loans are amortized, monthly payments are ___________, while the interest portion of the monthly payment ___________ and the principal portion of the monthly payment _____________ over time.
Constant, decreases, increases.
Constant, increases, increases.
Variable, decreases, increases.
Variable, decreases, decreases.
Each of the following financial products will help you build a credit history EXCEPT...
Debit card
Auto Loan
Student Loan
Credit Card
Your friend tells you that he has a low credit score. What is the best way for him to improve his score?
Make on-time payments
Cancel his credit cards
Get a car loan
Check his credit score
Frank and Jasmere are each shopping for a new car for themselves. Each will need a $20,000 loan that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?
Over the five year period, Jasmere and Frank will pay the same amount for the car loan
Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment
Jasmere's monthly payment on the loan will be about $100 more than Frank's payment
Lenders are not allowed to charge people different interest rates based on their credit scores
