WorksheetsUnderstanding Credit
Total questions: 72
Worksheet time: 36mins
What is the range of credit scores?
100 to 900
300 to 850
200 to 800
400 to 950
What percentage of your credit score is determined by payment history?
35%
20%
Which factor accounts for 30% of your credit score?
Credit utilization
Payment history
What is credit utilization?
The interest rate on your loans
The measure of how much credit you've used versus how much you have
How can you calculate your credit utilization percentage?
Divide your total credit limits by your total credit balances
Divide your total credit balances by your total credit limits and multiply by 100
What is the recommended maximum credit utilization percentage?
50%
30%
Where can you get a free credit score?
From any bank
From nonprofit credit and housing counselors
What is the most important factor in determining your credit score?
Types of credit
Payment history
What is the least important factor in determining your credit score?
Types of credit
Amounts owed
What should you do to maintain a good credit score?
Avoid using credit at all
Keep credit balances low compared to credit limits
What is the purpose of a credit score?
To determine your income level
To evaluate how likely you are to pay your debts
Why is it important to review your credit reports?
To check for errors that can reduce your scores
To apply for a mortgage
What does the length of your credit history account for in your credit score?
15%
20%
What does 'new credit' account for in your credit score?
10%
5%
Why is it not advisable to apply for credit cards at multiple stores?
It can decrease your credit score
It can increase your credit score
Which action can negatively impact your credit score the most?
Making late payments
Using less than 10% of your credit limit
How often are you entitled to a free credit report from each major credit bureau?
Once a year
Only when you apply for a loan
What is a good strategy to improve your credit score over time?
Paying bills on time and keeping credit balances low
Closing old credit card accounts
Applying for a credit card only affects your credit score if you use the card.
False
True
Paying less than the minimum payment on your credit card bill doesn’t count as a missed payment.
True
False
The more credit cards you have, the better.
True
False
Which of these show your credit history?
Credit score
Credit report
Both
Student loans impact your credit score.
Myth
Fact
Race and gender are factors in a credit score.
Myth
Fact
Capacity to pay will be taken into account when you apply for a credit card or loan.
Myth
Fact
Your credit score is not configured off of which of the following:
Payment history
Amount owed
GPA
Length of credit history
Which of the following items can be found on a credit card statement?
payments made and new charges
fees and interest charged
year to date totals and how long it will take you to pay it off w/minimum only
all of these
Bank of America issues you a credit card with a maximum balance of $1,000. This is an example of:
Finance Charge
Co-Signer
Minimum Payment
Credit Limit
Which of the following may request your credit report?
insurance companies
your employer
your landlord
all of the above
What type of credit score is this 570?
Average
Poor
Which is an exceptional credit score?
813
713
Which of the following probably has the highest credit score? Assume that all of them have made regular monthly payments on time.
A 40 year old business owner with two cars, a house, and four active credit cards
A 20 year old waitress with two active credit cards
The most common credit scoring system is called the
FISO
FICO
The higher your credit score, the higher your interest rate will be.
True
False
Which is not included in an individual’s credit report?
Current and past addresses
Account balances
Bankruptcies and foreclosures
Medical information
Which best explains what a credit score represents?
A number expressing how likely you are to rob a bank
A rating expressing how likely you are to repay your debts
A number expressing your yearly income
A number expressing how much money is in your bank account
Read the following situation:
Gloria has a credit card with a limit of $5000. Every month she uses up at least 90% of her credit and pays interest rates because she cannot cover the full amount monthly. Are Gloria's credit habits going to help her get a high score?
Yes
No
My credit history does not affect my chances for renting my first apartment. Is this statement True or False?
True
False
Routinely paying my bills late could negatively affect my credit history. Is this statement True or False?
True
False
To build a positive credit history, I should pay cash for all purchases. Is this statement True or False?
True
False
When I apply to borrow money for a car, the loan company will most likely look at my credit history. Is this statement True or False?
True
False
I need to first pay bills, such as a loan or a phone bill to establish credit history. Is this statement True or False?
True
False
The more credit cards I have the higher my credit score will be. Is this statement True or False?
True
False
My landlord can report my failure to pay rent to a credit reporting agency. Is this statement True or False?
True
False
If my credit card allows me to charge up to $1000, I should charge the maximum amount to build my credit history. Is this statement True or False?
True
False
I should review my credit report for errors. Is this statement True or False?
True
False
A bad credit report cannot affect my chances for getting a job. Is this statement True or False?
True
False
Late payments are retained on credit reports for 7 years. Is this statement True or False?
True
False
The interest rate that lenders will charge you when you borrow money will not depend on your credit report. Is this statement True or False?
True
False
Lenders may use your credit report information to decide whether you can get a loan and the terms you get for a loan. Is this statement True or False?
True
False
A credit card requires you to:
make a fixed monthly payment until the loan is paid off
make a minimum payment based on the outstanding balance
pay interest on all purchases
obtain approval from the lender before making a purchase
True or false: With a credit card you are using the bank's money, not your own.
True
False
What is credit?
An exchange where you do not have to pay the money back
An exchange where you pay the money back at a later date
A type of checking account
A type of check
If you pay just the minimum payment on your credit card statement....
You will have to pay interest
The bank does not make you pay the remaining amount owed back
You will not get charged interest
You will have to pay a tax
This is the yearly interest rate charged...
Due date
Cash advance
APR
Transactions
One similarity between a debit card and credit card is that
They both earn you interest
They both are your own money
They both involve borrowing money
They both can be used to make purchases online
True or false: If you only make the minimum payment on your credit card bill, it will take longer to pay off the full balance.
True
False
True or false: With a credit card you are using the bank's money, not your own.
True
False
This is the smallest amount of your credit card bill you must pay in order to remain in good standing with the lender
APR
Maximum payment
Minimum payment
Grace period
In order to avoid paying any interest on your credit card bill you must...
Pay your balance owed in full
Pay half your balance owed
Pay the minimum payment
Open up multiple credit cards
You charge $500 on each of your two credit cards. American Express has an interest rate of 15.99%, and Chase Sapphire has an interest rate of 20.99%. If you only make the minimum payment of $25 to each credit card company, which card will you pay off first?
You have a choice between two credit cards: American Express (8.99%) or Chase Sapphire (12.99%.) Which card offers the better rate?
What is a good practice when it comes to credit cards?
getting as many credit cards as possible
paying only the minimum
charging anything you want
paying the amount charged in full each month
Something of value that a borrower lets the lender claim if a loan is not repaid.
Loan
Debt
Credit
Collateral
The total amount of money owed lenders or creditors.
Loan
Debt
Credit
Collateral
Amount of money borrowed.
Revolving Credit
Principal
Installment Credit
Term
The amount of time you have to pay the loan back.
Revolving Credit
Term
Installment Credit
Repossession
The cost to borrow money which has to be paid.
Revolving Credit
Interest
Principal
Term
The money you still need to pay on your credit card or other type of loan.
collateral
credit rating
balance owed
cash advance
A written record of your past borrowing, including credit cards, car loans, mortgage, etc.
cash advance
collateral
debit card
credit history
A plastic card that let's you borrow money to pay for things. You should pay the bill each month.
credit card
debit card
credit rating
credit limit
