WorksheetsManaging Credit - Unit Test
Total questions: 20
Worksheet time: 10mins
What are the two most important factors in calculating your credit score?
Payment history and types of accounts
Total debt and length of credit history
Payment history and amounts owed
Length of credit history and new credit inquiries
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…
Reducing spending by canceling some of her streaming subscriptions
Taking extra shifts at work to increase her income
Making more than the minimum required payment on her debt
Applying for another credit card to use in case she runs out of cash paying off her debt
Which factor is NOT directly considered in calculating a credit score?
Payment history
Length of credit history
Income level
Types of credit used
What is a potential consequence of making only the minimum payment on credit card debt?
Decreasing your credit score
Paying more in interest over time
Increasing your credit limit
Improving your credit utilization ratio
Which of the following actions can help improve your credit score?
Closing old credit accounts
Consistently paying bills on time
Applying for multiple credit cards at once
Keeping credit card balances high
Which of the following is a sign of good credit management?
Maxing out credit cards regularly
Having a high credit utilization ratio
Maintaining a diverse mix of credit types
Frequently applying for new credit
What is the recommended maximum credit utilization ratio to maintain a healthy credit score?
10%
30%
50%
70%
Which of the following is NOT a component of the FICO credit score model?
Payment history
Amounts owed
Employment history
New credit
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
Who tracks all of your credit information?
Credit reporting agencies (Equifax, Experian and TransUnion)
Federal government
Consumer Financial Protection Board (CFPB)
Lenders
A way to pay off debts by starting with the smallest balance first, then rolling the payments into the next debt as each one is paid off.
High Rate Method
Snowball Method
A debt repayment strategy where you focus on paying off debts with the highest interest rates first to save more on interest costs over time.
High Rate Method
Snowball Method
The amount you can charge to a secured credit card is limited by…
Your credit score
The amount of money you deposit into an account as collateral
The total amount of money across all your bank accounts
How long you’ve had an account with the bank
How can your credit score impact your financial well-being?
Only consumers with high scores are approved for credit
Consumers with low scores get lower interest rates on loans than those with high scores
Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
It generally has no impact on your financial situation
Which response best completes the sentence "It's best to begin establishing credit when you're young because ________" ?
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
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card
What is the general timeline to establish your first credit score?
As soon as you apply for a credit card or loan
Six months after you first actively use your credit
Once you pay all of your credit balances in full
Once you turn 18
Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?
Cancel his credit cards
Check his credit score
Make on-time payments
Get a car loan
What is credit utilization?
The amount of money you owe on your credit card
The total amount of credit you have available
The percentage of your credit limit that you are currently using
The number of credit cards you have
What is the best definition of a credit report?
A number that shows a snapshot of your credit at a specific moment in time
A number that shows how much of your overall credit you're using
A period of time between when you spend money and when the company charges you interest
A history of how you pay back loans and credit cards
is a three-digit number that rates your creditworthiness. The higher the score the more likely you are to
get approved for loans and for better rates.
Federal Reserve
CCC
Credit Score
Credit Card
