WorksheetsTypes of Credit Review
Total questions: 24
Worksheet time: 22mins
Name
Class
Date
1.
1. What are the two most important factors in calculating your credit score?
a)
Payment history and types of accounts
b)
Amounts owed and length of credit history
c)
Payment history and total debt
d)
Length of credit history and new credit inquiries
2.
2. Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…
a)
Reducing spending by canceling some of her streaming subscriptions
b)
Taking extra shifts at work to increase her income
c)
Making more than the minimum required payment on her debt
d)
Applying for another credit card to use in case she runs out of cash paying off her debt
3.
3. How can your credit score impact your financial well-being?
a)
Only consumers with high scores are approved for credit
b)
Consumers with low scores get lower interest rates on loans than those with high scores
c)
Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
d)
It generally has no impact on your financial situation
4.
5. Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?
a)
Paying your bills on-time
b)
Paying down balances on your credit card accounts
c)
Decreasing your utilization of credit
d)
Applying for multiple credit cards
5.
6. Which best describes the Debt Snowball method for paying off debt?
a)
Only make payments on your smallest debt first, then move on to your second smallest debt, and so on
b)
Once your debt "snowballs" out of control, hire a certified credit counselor to help get your finances back on track
c)
Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the highest balance
d)
Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance
6.
7. What benefits do you receive by taking out a loan with a cosigner?
a)
You don’t get penalized for late payments
b)
You get a discount on future loans after this one is paid off
c)
You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit
d)
You automatically get the same credit score as the cosigner once the loan is paid off
7.
8. Which response best completes the sentence "It's best to begin establishing credit when you're young because ________" ?
a)
Accessing credit only becomes more expensive as you get older
b)
Negative marks on your credit report go away faster for younger borrowers
c)
Credit scores are free for anyone under the age of 25
d)
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card
8.
10. All of the following would show up on a credit report, EXCEPT...
a)
Salary of your current job
b)
Payment history of your car loan
c)
Credit card payment history
d)
Student loan activity
9.
11. Which of the following is most likely to represent a fixed rate, secured debt?
a)
A student loan
b)
A credit card
c)
A prepaid debit card
d)
An auto loan
10.
12. Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?
a)
Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount
b)
The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly
c)
The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan
d)
Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash
11.
13. If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?
a)
Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help
b)
Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
c)
Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms
d)
Explore whether a free or non-profit credit counseling service could help
12.
15. Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment while still having extra cash in her emergency fund. She expects the exact model car she’s looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow?
a)
Put in $0 for your down payment, and choose a loan with a short term length
b)
Put in $2500 for your down payment, and choose a loan with a short term length
c)
Put in $3500 for your down payment, and choose a loan with a long term length
d)
Put in $5000 for your down payment, and choose a loan with a long term length
13.
16. Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?
a)
All 3 cards are completely different
b)
Debit cards and prepaid debit cards are the same
c)
Debit cards and credit cards are the same
d)
All 3 cards are completely the same
14.
17. A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.
a)
higher, less
b)
higher, more
c)
lower, less
d)
lower, more
15.
18. Select the statement below that accurately describes a characteristic of a credit card.
a)
You owe the same payment every month
b)
You must have money deposited into a checking account to use the credit card for purchases
c)
Making full payments on-time every month is the only way to avoid interest charges
d)
They do not charge interest
16.
19. Which of the following statements is CORRECT about secured loans?
a)
They are a good choice to use for student loans
b)
If the borrower does not make payments, the lender can repossess the item
c)
In the event of default, the borrower loses nothing except for the down payment
d)
They usually have higher interest rates as compared with unsecured loans
17.
20. An excellent credit score will help with which aspect of car financing?
a)
Bargaining for a great sales price
b)
Receiving a large down payment
c)
Qualifying for a low interest rate
d)
Having a wide selection of term lengths
18.
21. Which of these credit payback strategies would lead to the HIGHEST overall cost?
a)
Paying off your credit card bill in full every month
b)
Paying 20% of your credit card balance every month on time
c)
Making the minimum payment (3% of your credit card balance) every month on time
d)
Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
19.
22. Duc has a credit card with a $1000 credit limit. His outstanding balance is currently $800. What is the maximum amount he can now spend on this credit card?
a)
$200
b)
$800
c)
$1000
d)
$1800
20.
A key factor influencing credit scores is:
a)
Recent credit applications
b)
Monthly Expenses
c)
Marital Status
d)
Education Level
21.
How long does a bankruptcy typically remain on a credit report?
a)
3-5 years
b)
7-10 years
c)
12-15 years
d)
Indefinitely
22.
Which types of debt usually CANNOT be erased or reduced?
a)
Federal Student Loans
b)
Credit Card Debt
c)
Medical Debt
d)
None of these types of debt can be erased or reduced
23.
Which of the following factors will most likely INCREASE the overall cost of your loan?
a)
A lower interest rate
b)
A longer term loan
c)
Offering collateral to secure the loan
d)
Paying a higher down payment
24.
John's beginning balance on his checking account is $35. He deposits $400 and makes purchases of $80 and $45 What is his ending balance?
a)
$400
b)
$435
c)
$310
d)
$355
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