Worksheets05 Credit Outcome Review- Managing types of credit
Total questions: 19
Worksheet time: 16mins
Hannah is determined to eliminate her debt quickly as it is affecting her financial stability. Which of the following actions would NOT be advisable for her to take?
Cutting down on dining out to save more money
Selling unused items to generate extra cash
Setting up automatic payments to avoid late fees
Applying for another credit card in case she runs out of cash
Arun has multiple sources of debt and wants to pay the lowest amount of interest over time. What strategy should he use?
Snowball method
Make minimum payments
High rate method
Consolidate multiple debts into one new loan
What is the primary focus of the Debt Snowball method when managing multiple debts?
Consolidate all debts into one payment to simplify the process
Pay off the debt with the highest interest rate first to save on interest
Concentrate on paying off the smallest debt first while making minimum payments on others
What is one possible outcome of failing to repay your federal student loans?
Your wages can be garnished
You could be denied a mortgage
You might lose your health insurance
Your car could be repossessed
Why is it advantageous to start building your credit history early in life?
Older individuals are not allowed to apply for credit cards
Young people can get loans with no interest
A strong credit history can help you secure better loan terms in the future (car, credit card, mortgage)
Credit scores are automatically higher for those under 30
Why might it be beneficial to make additional payments on a fixed-rate mortgage?
It increases the overall interest you pay, but shortens the loan term
Extra payments reduce the principal balance, leading to less interest paid over time
If you're struggling to keep up with your car loan payments and need to stick to a strict budget, which of the following suggestions is the least advisable?
Seek additional income by getting a part-time job, working overtime, or asking for help from family if they are able to assist
Ignore some of your debt payments to concentrate on managing the most costly or largest debts
Maintain all payments and contact your creditors to negotiate for reduced monthly payments, lower interest rates, or extended terms
You and your roommate are considering signing up for a subscription service that requires a credit check. Your roommate is unable to qualify due to their credit score and asks you to put the account in your name, assuring you that they will cover the monthly payments.
What risks might you face if you agree to this arrangement?
What alternative solutions could you recommend to your roommate?
Nora is planning to buy a new car and wants to ensure she gets the best financing deal possible. An excellent credit score will help her with which aspect of car financing?
Bargaining for a great sales price
Receiving a large down payment
Qualifying for a low interest rate
Having a wide selection of term lengths
Which credit card repayment method would result in the most interest paid over time?
Paying the full balance each month
Paying half of the balance each month
Paying the minimum required amount each month
Paying the minimum required amount each month with frequent late payments
What are the consequences if David fails to pay child support? List 1 potential consequence:
Mark borrowed $500 from a payday lender in June. By December, he had repaid a total of $1,250. What is the most plausible explanation for this situation?
Payday loans often have low monthly payments, leading to high interest accumulation over time
Mark was aware of a $750 fee associated with the loan from the start, but he needed the money urgently
Payday loans require full repayment within a short period, and failing to do so results in costly renewals, which Mark did multiple times
Describe one pro and one con of looking for additional work or getting a second job to help pay down debts faster.
Which of the following actions can negatively impact your credit score the most?
Making late payments on your credit cards
Checking your credit report for errors
Paying off your credit card balance in full each month
Keeping your credit utilization low
What is a potential risk of consolidating multiple debts into a single loan?
Your monthly payment will always decrease
You may end up with a higher overall interest rate
You will automatically improve your credit score
Debt consolidation is only available for student loans
Which strategy is most effective for avoiding late fees and maintaining a good credit history?
Ignoring your monthly statements
Applying for new credit cards frequently
Paying only the minimum amount due each month
Setting up automatic payments for your bills
