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WorksheetsCredit Score Quiz
Total questions: 60
Worksheet time: 1hrs 27mins
What is a credit score?
A measure of your income that rates your ability to save
A three-digit number that rates your creditworthiness
A rating of your checking and savings accounts and assets
A loan application form
Which of the following is NOT a factor considered in your credit report?
Credit score
Payment history
Amount of money in your checking account
Total levels of debt
What are the three major credit bureaus in the U.S.?
Equifax, Experian, TransUnion
Visa, Mastercard, American Express
Google, Apple, Microsoft
Facebook, Twitter, Instagram
What is VantageScore?
A type of score created by the Fair Isaac Copopration
A credit rating product combining information from all three credit bureaus
A rating for businesses created by the Consumer Financial Protection Bureau
A score that rates your checking and savings balances
Which credit score model is most commonly used by financial institutions?
VantageScore
FICO
Equifax
TransUnion
What is generally considered an excellent credit score?
700-749
750-799
800 and above
600-649
Which of the following factors is NOT one of the main factors evaluated when calculating a credit score?
Payment history
Amount owed
Length of credit history
Monthly income
What is the term for the percentage of credit you've expended compared to the credit available to you?
Credit limit
Credit utilization
Credit history
Credit score
Why might a lengthier credit history be considered less risky by lenders?
It shows a variety of credit types
It provides more data to determine payment history
It indicates a higher credit limit
It suggests a lower amount owed
What can negatively affect your credit score according to the text?
Having a variety of credit types
Keeping credit accounts open
Too many recent applications for credit
Paying bills on time
What is a credit card?
A type of loan that requires collateral
A rectangular piece of plastic or metal issued by a bank tied to credit limit
A savings account with high interest rates
A rectangular piece of plastic or metal issued by a bank tied to checking account
What is a common feature of credit cards with rewards programs?
Lower interest rates
Higher interest rates
No interest rates
Fixed interest rates
What is a secured credit card?
A card with no credit limit
A card that requires collateral
A card with unlimited rewards
A card with no interest charges
What is the grace period required by law for credit card issuers?
7 days
14 days
21 days
30 days
What is a cash advance in terms of credit cards?
A reward for using the card frequently
A loan taken against the credit card's line of credit
A discount on purchases
A loan taken out at a payday lender
What is the DTI ratio used for?
To determine the interest rate on a loan
To assess the percentage of gross monthly income used for debt payments
To calculate the total amount of debt a person can have
To evaluate the credit score of an individual
What is a potential benefit of making responsible purchases and paying them off in a timely manner?
Decrease in credit limit
Increase in interest rates
Improvement in credit score
Reduction in monthly income
What should you check to find the APR on a credit card?
The Front of your credit card
The Federal Reserve Website
The Schumer Box
The back of your credit card
Why might some credit cards have annual fees?
To increase the card's credit limit
To cover the cost of rewards or incentives
To decrease the interest rate
To improve the cardholder's credit score
What is a secured credit card?
A card with no spending limit
A card that requires a security deposit
A card with the highest interest rates
A card that offers unlimited rewards
What is the main benefit of using credit cards responsibly?
Higher interest rates
Building strong credit scores
Unlimited cash advances
No need to pay back borrowed money
What is a key component of building a good credit history?
Making regular, on-time payments
Avoiding all types of credit
Using credit cards for every purchase
Ignoring credit utilization
What does a low debt-to-income (DTI) ratio indicate?
High borrowing risk
Good balance between debt and income
Excessive debt relative to income
Poor credit management
What is the highest DTI ratio a borrower can have and still qualify for a mortgage?
50%
43%
36%
28%
What is a catch-22 situation in building credit?
Having too many credit cards
Banks being less likely to extend credit to those without credit
Paying off loans too quickly
Using only cash for transactions
What is the annual fee on a credit card?
A fee for late payments
A fee charged by the card issuer to extend credit
A fee for exceeding the credit limit
A fee for cash advances
What is the lowest credit score?
350
300
500
250
What is the purpose of a credit limit on a credit card?
To determine the interest rate
To set a maximum amount you can borrow
To offer unlimited spending
To calculate monthly fees
What is a balance transfer in credit card terms?
Paying off your credit card balance in full
Transferring rewards points to another card
Moving debt from one credit card to another
Transferring money from your savings account to your credit card
What is the impact of closing a credit card account on your credit score?
It guarantees a higher credit score
It always improves your credit score
It can potentially lower your credit score
It has no impact on your credit score
Which of the following is NOT one of the 3 credit reporting agencies?
Transunion
Equifax
Experian
Credit Karma
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 recommended credit utilization ratio to improve your credit score?
0-9%
10-19%
30-39%
40-49%
Paying my bills late could negatively affect my credit history.
True
False
My credit history does not affect my chances for renting my first apartment.
True
False
Numerous credit applications in a short period of time will have what kind of impact on your credit score?
Positive Impact
Negative Impact
Which of the following affects your credit score the most heavily?
total amount of debt
payment history
amount of new credit
types of credit
length of credit history
Which of the following probably has the highest credit score? Assume that all of them have made regular monthly payments on time.
An 18 year old college freshman
A 20 year old waitress with two active credit cards
A 40 year old business owner with two cars, a house, and four active credit cards
A 50 year old with five credit cards who rents his house.
The amount you pay to borrow someone else's money.
Interest
Fees
Deposit
Credit
(a) is your credit score (points) that is converted into a rating, which can range from poor to excellent.
(a) is how likely a person will pay back a lender.
(a) is borrowing money and promising to pay the debt later.
Which of the following statements is CORRECT about secured loans?
They are a good choice to use for student loans
If the borrower does not make payments, the lender can repossess the item
In the event of default, the borrower loses nothing except for the down payment
They usually have higher interest rates as compared with unsecured loans
An excellent credit score will help 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
Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?
This is required by federal law for tax purposes
This allows the card holder to pay their bill quickly and close the card when they're ready
This enables the credit card company to make more money
This helps cardholders develop financial independence
Which of the following statements is TRUE:
Applying for several lines of credit in a short period of time can help boost a person’s credit score.
Paying off a credit card balance in full can have a negative impact on someone’s credit score.
The longer you use credit responsibly, the higher your credit score.
Low risk borrowers tend to have low credit scores.
An amount of credit extended to a borrower is known as a...?
Line of Extension
Several dollars lined up in a straight line
Available Credit
In the finance world it is referred to as a "long nose"
Revolving credit is...
a type of credit that can be used repeatedly up to a certain limit as long as the account is open and payments are made on time.
a type of credit that can be used only once up to a certain limit and must be closed immediately after all payments are due
a spinning door with money in it
a round device that holds credit cards and spins, making it easy to shuffle through all your credit cards quickly
What is a loan term?
The amount of time a revolving line of credit can be open
The payment of income to a savings account in regular payments over a set period of time.
The period in which the loan is to be repaid, each payment broken down into individual installments
Specifically related to the black market for human organs, and typically meant as the length of time one's kidney will be used for other purposes
After Henry declared bankruptcy, he learned that the bankruptcy would stay on his credit report for how long?
7.5 years
always
10 years
20 years
Imagine Maddy is applying for a home loan. What advantages could she enjoy with a good Credit Score?
lower interest rates
lower down payments
faster loan approval
all answers are correct
You and your friends go to the movie theater. Before the movie starts, you buy popcorn, soda, and a bag of gummies. You pay for these items with a card that pulls directly from your checking account. Is this an example of using debit or credit?
debit
credit
A downside or negative to using credit as a payment option is that it is easy to overspend which leads to more debt.
True
False
It's the holiday season, so Abby heads out for a day of shopping to buy presents for her family. She pays for the presents with a card. At the end of the shopping trip, she checks her online banking app to find that there is only $35.10 left in her checking account after a day of shopping. Did Abby use debit or credit?
debit
credit
Ms. Amanda splurged and bought a boat. Once she realized she could not make the minimum monthly payment for the boat, she decided to return the boat. Did Ms. Amanda use debit or credit to purchase the boat?
debit
credit
Which of the following is TRUE about finding errors on your credit report?
You may have to file a dispute with each credit bureau
You should wait until the end of the month before reporting
Finding errors is common & is not a big deal
Overlooked errors may result in you paying a fine
What is unique about an unsecured loan?
Require no collateral
Require collateral
Interest free
Don't affect your credit score
