WorksheetsUnit 5 Quiz
Total questions: 36
Worksheet time: 22mins
What is the Annual Percentage Rate (APR)?
The cost you pay each year to borrow money, including fees, expressed as a percentage
The total amount of money you owe to creditors
A three-digit number based on your credit history
A type of bankruptcy for people with limited incomes
Ava has a credit card account and decides to let Grace use her card for purchases. Grace has permission to use and/or carry Ava's credit card, but isn't legally responsible for paying the bill. Which of the following best describes Grace's role?
An authorized user, who has permission to use and/or carry another person's credit card, but isn't legally responsible for paying the bill
A person who is responsible for paying off all debts on a credit card
A person who issues credit cards to others
A person who collects debts for a collection agency
What is the main purpose of the Consumer Financial Protection Bureau (CFPB)?
To help protect consumers by regulating financial products and services
To issue credit cards to consumers
To collect debts from delinquent borrowers
To provide loans to businesses only
What is a Credit Score?
A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report
A document with information about a person’s credit activity and history
A type of bankruptcy for people who can afford monthly payments
A method of debt repayment prioritizing highest interest rates
Luna has several debts with different interest rates. She wants to pay off her debts in the most cost-effective way possible. Which method should Luna use if she wants to prioritize paying down debts with the highest interest rates first?
The debt avalanche method
A strategy of taking out low-interest loans to use as income
A type of bankruptcy for people with limited incomes
A method of collecting past-due debts by a collection agency
Priya has several credit card debts and a car loan, each with different interest rates and payment dates. She is considering a financial product that would allow her to combine all these debts into a single loan with one monthly payment. What is this type of loan called?
A debt consolidation loan
A loan that increases your net worth
A loan that is only for buying property
A loan that is only for students
Mia has several debts and wants to use the Debt Snowball Method to pay them off. What should she prioritize?
Paying down debts with the smallest balances first
Paying off the highest interest rate debts first
Consolidating all debts into one payment
Settling debts for less than owed
Benjamin is trying to improve his credit score. He learns that a certain percentage of his credit score is based on his payment history. What percentage is it?
35%
10%
50%
25%
What is a Hard Inquiry?
An inquiry into your credit history, typically in advance of applying for a loan, which can negatively affect your credit for 12 months and remain on your credit history for two years
A type of loan for people with bad credit
A payment made to reduce debt
A law that protects consumers from discrimination
Mason wants to understand his financial situation. He calculates the value of everything he owns and subtracts what he owes. What is this measurement called?
A measurement of your assets minus your liabilities
The total amount of money you earn in a year
The value of your home only
The amount of money you owe in taxes
Scarlett bought a car using a loan, but after missing several payments, the lender took the car back. What does this process refer to?
Reposession
The process of selling a house
The act of opening a new credit account
The calculation of your net worth
Which of the following does NOT affect your credit score?
Soft Inquiry
Tax Lien
Repossession
Types of Credit
What is a "Thin File" in credit terminology?
A term used to describe someone with little to no credit history
A file containing your tax records
A report of your annual income
A document listing your assets
What does the Truth in Lending Act require lenders to do?
Share specific loan cost information and notify borrowers of changes
Increase interest rates annually
Report all loans to the government
Offer loans only to people with high credit scores
Scarlett wants to improve her credit score. Which of the following actions should she take?
Making all loan and credit card payments on time
Maxing out your credit cards
Applying for multiple new credit cards at once
Ignoring your credit report
What is a Soft Inquiry in credit terminology?
A payment made to reduce your debt
A law that requires lenders to disclose loan terms
A type of loan for people with low income
An inquiry into your credit report that does not affect your credit score
Benjamin is calculating his net worth. Which of the following should he count as a liability?
Outstanding credit card debt
The value of your car
Cash in your savings account
Stocks you own
Which of the following actions could negatively impact your credit score?
Missing a credit card payment
Reviewing your own credit report
Setting up automatic bill payments
Keeping your credit card balance low
What is the main benefit of making more than the minimum payment on your credit card each month?
It increases your credit limit automatically
It helps you pay off your debt faster and reduces the amount of interest you pay
It guarantees a higher credit score immediately
It prevents your account from being closed
Which of the following is considered an asset when calculating your net worth?
Your unpaid credit card balance
Your monthly rent payment
Your outstanding student loan
The balance in your savings account
What can you do to avoid debt?
Spend more money than you earn
Use all your savings to buy expensive things
Only use money that you have, instead of borrowing
Borrow money from many different people
What is a 'Credit Score'?
The maximum amount of credit a borrower can use
A yearly charge for credit card usage
A measurement of someone's creditworthiness
An initial cash payment for a large purchase
What does it mean to have debt?
You have saved a lot of money
You owe money to someone or a company
You have a lot of money in your wallet
You found money on the street
What should you NOT use a loan to purchase?
A house
Tuition for higher education
Airline tickets to your dream vacation
A car
A person who agrees to pay off a loan if the original party does not pay
Collateral
Character
Character
Cosigner
What is the primary purpose of a credit card?
To earn interest on your purchases.
To borrow money for purchases.
To directly deduct money from your account.
To invest in stocks and bonds.
