WorksheetsCredit and Debt Vocab
Total questions: 24
Worksheet time: 12mins
What is a fixed rate in terms of a loan?
The interest rate changes frequently
The interest rate stays the same for the life of the loan
The interest rate decreases over time
The interest rate increases over time
What should you do if you cannot pay your credit card bill?
Ignore the bill
Call the lender and negotiate a new payment schedule
Pay only the minimum amount
Take out another loan
What type of loans should you avoid?
Student loans
Payday loans and Pawn Shops
Mortgage loans
Auto loans
How long does bankruptcy stay on your credit report?
5 Years
7 Years
10 Years
15 Years
What decreases on a loan every month?
The Interest
The Principal
The Term
The Collateral
What is a credit score?
A measure of monthly income
A numerical expression based on a level analysis of a person's credit files
A type of loan
A bank account balance
What doesn’t go away even after you file for bankruptcy?
Credit card debt
Taxes, student loans, and child support
Mortgage loans
Auto loans
What happens if you do not pay a loan bill?
The loan is forgiven
Bank or Lender repossesses the collateral
The interest rate decreases
The loan term is extended
What is a secured loan?
A loan with no collateral
A loan backed by collateral to reduce the risk associated with lending
A loan with a fixed interest rate
A loan with a variable interest rate
What is Chapter 7 bankruptcy also known as?
Reorganization bankruptcy
Liquidation or straight bankruptcy
Wage earner plan
Debt adjustment plan
What is the purpose of amortization?
To increase the loan amount
To pay off a debt over time through regular payments
To decrease the interest rate
To extend the loan term
What is an unsecured loan?
A loan backed by collateral
A loan issued and supported only by the borrower's creditworthiness
A loan with a fixed interest rate
A loan with a variable interest rate
What is Chapter 13 bankruptcy also known as?
Liquidation bankruptcy
Reorganization bankruptcy
Pay back or wage earner plan
Debt forgiveness plan
What is the definition of bankruptcy?
A legal process for declaring that a person is unable to pay his or her debts
A method to increase credit score
A way to avoid paying taxes
A type of investment strategy
What is debt-to-income ratio?
A measure of total debt
A personal finance measure that compares an individual's monthly debt payment to their monthly gross income
A type of loan
A credit score factor
Which of the following is most likely to improve your credit score?
Maxing out credit cards
Paying bills on time
Applying for multiple loans at once
Missing loan payments
What is the main risk of taking out a payday loan?
Low interest rates
Short repayment period and high fees
Improved credit score
Long-term repayment options
Which type of loan typically requires you to provide an asset as security?
Credit card
Personal line of credit
Secured loan
Unsecured loan
Which of the following is a consequence of missing multiple loan payments?
Your credit score may decrease
Your interest rate is automatically lowered
Your loan balance is reduced
You receive a bonus from the lender
What is the main difference between a secured and an unsecured loan?
Unsecured loans have lower interest rates
Secured loans are only for students
Secured loans require collateral, unsecured loans do not
Unsecured loans require a co-signer
Which type of debt is most likely to be discharged in bankruptcy?
Credit card debt
Child support
Recent tax debts
Student loans
Which of the following best describes a variable interest rate loan?
The loan is only available to businesses
The loan is always unsecured
The interest rate can change over time based on market conditions
The interest rate remains the same throughout the loan term
What is the main advantage of making extra payments on your loan principal?
It lowers your credit score
It increases the total interest paid
It shortens the loan term and reduces interest costs
It extends the repayment period
Which type of bankruptcy is typically used by businesses to restructure their debts?
Chapter 7
Chapter 11
Chapter 13
Chapter 9
