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Credit and Loans

Total questions: 42

Worksheet time: 22mins

Name
Class
Date
1.

What is one benefit of borrowing money from a friend or family member instead of from the bank?

a)
Access to larger loan amounts without collateral.
b)
Guaranteed approval regardless of credit score.
c)
More flexible repayment terms.
d)
Lower interest rates than banks.
2.

What is a potential downside of asking a friend for a loan?

a)
It can strain the friendship.
b)
You can avoid paying interest.
c)
It guarantees repayment on time.
d)
It can improve the friendship.
3.

What are some common reasons people borrow money?

a)
To save for retirement
b)
To invest in stocks
c)
To purchase a new car outright
d)
Common reasons people borrow money include covering unexpected expenses, financing large purchases, consolidating debt, paying for education, and managing cash flow.
4.

How can borrowing from a bank help build your credit?

a)
Borrowing has no impact on your credit score.
b)
Borrowing is only beneficial if you take out a mortgage.
c)
Borrowing can help build your credit by establishing a positive payment history.
d)
Borrowing increases your debt-to-income ratio.
5.

What is the advantage of a lower interest rate from a friend?

a)
Increased risk of financial instability.
b)
Lower borrowing costs and increased financial flexibility.
c)
Higher interest rates lead to better savings.
d)
Limited access to funds for emergencies.
6.

What is the key difference between a credit card and a debit card?

a)
A credit card borrows money; a debit card uses your own funds.
b)
A credit card has no spending limit; a debit card does.
c)
A credit card is linked to a savings account; a debit card is not.
d)
A credit card uses your own funds; a debit card borrows money.
7.

What question is MOST useful in deciding between a credit card and a bank loan?

a)
What is the total cost of borrowing, including interest and fees, for the amount I need?
b)
What is the minimum payment on my credit card?
c)
How many credit cards do I currently have?
d)
What is the interest rate for a savings account?
8.

What is one reason to be careful about using credit?

a)
It can lead to accumulating debt.
b)
It provides cash back rewards.
c)
It allows for unlimited spending.
d)
It helps improve your credit score.
9.

What does the word "balance" mean?

a)
A type of financial statement.
b)
A method of cooking food.
c)
A style of painting.
d)

The amount owed.

10.

What are the 3 top credit reporting agencies?

a)
Experian, TransUnion, Equifax
b)
Credit Karma, Mint, NerdWallet
c)
FICO, VantageScore, Credit Sesame
d)
American Express, Discover, Chase
11.

Which statement about credit card interest rates is TRUE?

a)
Credit card interest rates are lower than rates for secured loans.
b)

Credit card interest rates are typically higher than rates for other loans.

c)
Credit card interest rates are the same as personal loan rates.
d)
Credit card interest rates are fixed and do not change over time.
12.

Which age group tends to have the most credit card debt?

a)

Individuals aged 18 to 35

b)

Individuals aged 45 to 54

c)

Individuals aged 60 and over

13.

What is the best way to avoid going into large debt on your credit card?

a)
Create a budget and pay off your balance in full each month.
b)
Use your credit card for all purchases without limits.
c)
Only make minimum payments each month.
d)
Ignore your credit card statements and fees.
14.

Should you pay the minimum or the full balance on your credit card?

a)
Pay only the interest
b)
Pay half of the balance
c)
Ignore the balance altogether
d)
Pay the full balance.
15.

What is a credit score?

a)
A credit score is a rating of a person's age.
b)
A credit score is a type of loan.
c)
A credit score is a measure of a person's income.
d)

A credit score is a 3 digit number that represents a person's creditworthiness.

16.

Name one section typically found in a credit report.

a)
Payment History
b)
Account Information
c)
Credit Score
d)
Personal Information
17.

What information is usually included in the "Account Information" section?

a)
Account creation date, last updated date, and preferred language settings.
b)
Account balance only, with no transaction details or contact information.
c)
Account holder's name, account number, account type, balance, transaction history, and contact information.
d)
Account holder's email, password, security questions, and last login date.
18.

What are the five factors that impact your credit score?

a)

Payment History

Length of Time

Mixed Credit

New Credit

Old Credit

b)

Payment History

Capacity

Length of Credit

Mixed Credit

New Credit

19.

What factor is based on making your payments on time?

a)
Account age
b)
Payment history
c)
Loan amount
d)
Credit utilization
20.

What factor is based on not overusing your credit limit?

a)

Capacity

b)
Loan interest rate
c)
Credit score
d)
Debt-to-income ratio
21.

What is the percentage you should remain using to stay within your capacity?

a)

80%

b)

60%

c)

30%

d)

90%

22.

How do you calculate the total amount paid for a loan?

a)

Total Amount Paid = Principal + Total Interest Paid

b)
Total Amount Paid = Monthly Payment + Total Number of Payments
c)
Total Amount Paid = Principal - Total Interest Paid
d)
Total Amount Paid = Monthly Payment / Total Number of Payments
23.

How do you calculate the capacity limit of a credit card?

a)

It is calculated by adding all previous transactions and minus 30%.

b)

The capacity is calculated by multiplying the credit limit by 30%.

c)

The capacity limit of a credit card is determined by the credit limit minus any outstanding balance, multiplied by 30%.

24.

What is interest?

a)
Interest is the cost of borrowing money or the return on investment for saving.
b)
Interest is the fee for using a credit card.
c)
Interest is the amount paid for insurance.
d)
Interest is a type of tax on income.
25.

What is principal?

a)
The principal is the total amount of money spent on expenses.
b)

The principal is the original amount of money borrowed before interest.

c)
The principal is a type of loan that must be repaid.
d)
The principal is the interest earned on an investment.
26.

How often can you receive a free credit report?

a)
Twice a year from each bureau.
b)
Once every six months from one bureau.
c)
Every month from all three bureaus.
d)
Once a year from each of the three major credit bureaus.
27.

What is a prime credit score?

a)

A prime credit score is 700.

b)
A prime credit score is below 600.
c)
A prime credit score is between 600 and 699.
d)

A prime credit score is 720 and above.

28.

What is the range for credit scores?

a)
100 to 500
b)
400 to 900
c)
300 to 850
d)
250 to 750
29.

How does a low credit score impact the interest you pay for a loan?

a)
A low credit score guarantees a fixed interest rate for loans.
b)
A low credit score results in lower interest rates on loans.
c)
A low credit score has no effect on loan interest rates.
d)
A low credit score typically leads to higher interest rates on loans.
30.

How does a high credit score impact the interest you pay for a loan?

a)
A high credit score has no effect on loan interest rates.
b)
A high credit score typically leads to lower interest rates on loans.
c)
A high credit score guarantees loan approval regardless of interest rates.
d)
A high credit score results in higher interest rates on loans.
31.

How many credit bureaus are there?

a)

2

b)

3

c)

5

d)

4

32.

Check all of the credit bureaus

a)

Experian

b)

By The Hand

c)

Equifax

d)

Luna

e)

Transunion

33.

Why do banks want to know the financial history of their loan customers?

a)

To understand the financial risk of giving a consumer a line of credit.

b)

To find out their favorite stores.

c)

To see their family history.

d)

To know their travel plans.

34.

A credit report contains many pieces of personal information about a consumer. Name two.

a)

Previous addresses, Social Security number.

b)

Favorite movies, favorite foods.

c)

Pet names, favorite colors.

d)

Vacation spots, hobbies.

35.

You are busy with finals and forgot to pay your credit card bill. You are charged $100 in late fees. This will likely lower your (fill in the blank).

a)

Credit score.

b)

Height.

c)

Age.

d)

Shoe size.

36.

What does a credit reporting agency do?

a)

It keeps records of consumers’ credit history.

b)

It plans vacations.

c)

It organizes parties.

d)

It writes novels.

37.

Your available credit is $1,000, but you keep your debt to $200. How does this help you build a positive credit history?

a)

When you spend less than your credit limit, it reflects positively on your spending habits.

b)

It makes you spend more money.

c)

It lowers your credit score.

d)

It increases your debt.

38.

What are the name of the sections on a credit report? Select all that apply.

a)

Inquires

b)

Information

c)

Personal Information

d)

Accounts

39.

What should you do if something is wrong on your Credit Report?

a)
Ignore the report and hope it fixes itself.
b)
Dispute the inaccuracies with the credit bureau.
c)
Contact your bank for a loan.
d)
Wait for the next credit report to see if it changes.
40.

My credit limit is $8,850. Calculate the capacity amount?

a)

$2,589

b)

$1,508

c)

$2,655

d)

$3,655

41.

What are the two most important factors that impact your credit score?

a)

Capacity and Mixed of Credit

b)

Mixed of Credit and New Credit

c)

Payment History and Capacity

d)

Payment History and Length of Credit

42.

What percentage does Payment History impact your credit score?

a)

30%

b)

35%

c)

15%

d)

10%

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