WorksheetsCredit Terminology
Total questions: 24
Worksheet time: 12mins
Name
Class
Date
1.
What is the minimum payment on a credit card?
a)
The total amount owed on the card
b)
The smallest amount of money required to pay towards the outstanding balance each month
c)
The credit limit on the card
d)
The interest charged on the card
2.
What does APR stand for?
a)
Annual Percentage Rate
b)
Average Percentage Rate
c)
Annual Payment Rate
d)
Accrued Payment Ratio
3.
What does the credit utilization ratio measure?
a)
The credit score of an individual
b)
The ratio of total credit card balances to total credit card limits
c)
The number of credit cards a person has
d)
The total amount of money borrowed
4.
What is a revolving credit?
a)
A type of credit that requires collateral
b)
A type of credit with a predetermined credit limit that can be borrowed, repaid, and borrowed again
c)
A type of credit that is repaid in fixed payments over time
d)
A type of credit with a one-time borrowing limit
5.
What is a credit card?
a)
A card that provides access to credit for purchases
b)
A card that allows you to withdraw cash from ATMs
c)
A card that stores personal information
d)
A card used for identification purposes
6.
What is an installment loan?
a)
A loan that can be repaid in varying amounts each month
b)
A loan that requires no collateral
c)
A loan that has no fixed repayment schedule
d)
A loan that is repaid in regular, fixed payments over a set period of time
7.
What does the term 'interest rate' refer to in the context of credit?
a)
The amount of money borrowed
b)
The original loan amount
c)
The total credit limit
d)
The percentage of a loan or credit card balance that is charged as interest over a certain period of time
8.
What is a credit score based on?
a)
Credit card limit
b)
Number of credit inquiries
c)
Income level
d)
Credit history and financial behavior
9.
What is collateral in the context of borrowing?
a)
Assets or property pledged as security for a loan
b)
The minimum payment required
c)
The original loan amount
d)
The interest charged on a loan
10.
What is the main purpose of a credit report?
a)
To monitor spending habits
b)
To provide a detailed record of an individual's credit history
c)
To calculate the credit limit
d)
To track an individual's income
11.
Why is credit history important for lenders?
a)
To set the credit limit
b)
To calculate the interest rate
c)
To assess the borrower's creditworthiness
d)
To determine the borrower's income level
12.
What does a credit freeze do?
a)
Increases the credit limit
b)
Restricts access to an individual's credit report
c)
Allows unlimited borrowing
d)
Improves the credit score
13.
What is the definition of credit?
a)
The ability to save money for future use
b)
The ability to borrow money or access goods or services with the understanding that you will pay for them later
c)
The ability to invest in the stock market
d)
The ability to purchase items without any form of payment
14.
What happens if a borrower makes a late payment?
a)
The lender will reduce the interest rate
b)
The lender will increase the credit limit
c)
The borrower's credit score will improve
d)
The borrower may incur penalties, fees, and negative consequences for their credit score
15.
How does a lender determine a borrower's creditworthiness?
a)
By offering low interest rates
b)
By assessing the borrower's credit history and financial behavior
c)
By looking at the borrower's income level
d)
By setting a high credit limit
16.
What is the role of a Credit Bureau?
a)
To determine credit limits
b)
To set interest rates for loans
c)
To collect and maintain credit information on individuals
d)
To provide loans to borrowers
17.
What is the purpose of credit counseling?
a)
To increase credit card limits
b)
To provide loans to individuals
c)
To determine credit limits for borrowers
d)
To assist individuals in managing debt and improving credit
18.
What is the purpose of a credit inquiry?
a)
To provide credit to borrowers
b)
To collect information on credit card limits
c)
To check an individual's credit report in response to a credit application
d)
To increase the credit utilization ratio
19.
Who provides credit to borrowers?
a)
Insurance companies
b)
Lenders
c)
Credit Bureaus
d)
Employers
20.
What is a credit limit?
a)
The maximum amount of credit that a lender extends to a borrower
b)
The total amount of money borrowed
c)
The minimum payment required each month
d)
The interest rate charged on a loan
21.
What is the credit utilization ratio?
a)
The interest rate charged on a loan
b)
The percentage of available credit being used by a borrower
c)
The minimum payment required each month
d)
The total amount of credit available to a borrower
22.
How does a credit inquiry impact a credit score?
a)
It permanently improves the credit score
b)
It has no impact on the credit score
c)
It can cause a temporary decrease in the credit score
d)
It automatically increases the credit score
23.
What is the principal in the context of credit?
a)
The total amount of money borrowed
b)
The interest rate charged on a loan
c)
The maximum amount of credit that a lender extends to a borrower
d)
The minimum payment required each month
24.
What does the Annual Percentage Rate (APR) represent?
a)
The total amount of credit available to a borrower
b)
The interest rate charged on a loan
c)
The percentage of available credit being used by a borrower
d)
The minimum payment required each month
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