WorksheetsUnit 4 Test Review
Total questions: 21
Worksheet time: 11mins
1. What’s the best way to avoid paying interest on a credit card?
Only make the minimum payment
Pay the balance in full on time
Pay half the balance
Ignore the statement until next month
Why do secured loans usually have lower interest rates?
They are very short-term
They include bonus rewards
They are backed by collateral
They require excellent credit only
Which item below can be used as collateral?
A paycheck
A house
A puppy
Your cellphone
What could cause a credit card’s penalty APR to activate?
Buying groceries
Using a debit card
Paying late
Having a good credit score
Which two factors have the greatest impact on credit score?
Payment history and total debt owed
Credit inquiries and job history
Credit mix and how old you are
Income and number of friends
Why might young adults struggle to get approved for loans
They always buy expensive cars
They have less payment history
They pay too many bills on time
They earn too much money
Which type of loan is riskier for lenders?
Secured
Unsecured
Deferred
Prepaid
If two borrowers get the same loan amount, why might their payments differ?
Different interest rates based on credit score
Their birthdays
The type of car they drive
The color of their debit card
Which group collects and maintains consumer credit information?
Utility companies
Credit bureaus
The local post office
School districts
What may happen when you apply for many credit cards in a short time?
Your credit score drops
Your score rises automatically
Your payment history erases
You avoid credit checks
What can happen if someone refuses to repay federal student loans?
Jail time
Their wages or tax refunds can be garnished
Loans go away
on its own
Nothing happens
Which of the following would likely hurt your credit score?
Reducing monthly expenses
Ignoring credit card payments
Making payments early
Lowering your utilization
Which statement describes debit vs credit?
Debit uses borrowed money; credit uses your bank funds
Debit is always safer to use than credit
Debit uses your own money; credit is borrowed money
Debit earns airline miles every month
Which is an example of a secured loan?
Credit card
Student loan
Auto loan
Personal line of credit
What describes a fixed-rate mortgage?
The interest changes every month
The interest rate stays the same
Payments stop after one year
It only applies to used homes
Why do shorter loan terms have higher monthly payments?
You’re borrowing more money
Interest stops building
You’re paying the loan off faster
You don’t pay interest at all
How can a low credit score affect a loan?
No interest charges
Lower approval chances and higher interest
Higher approval chances and lower interest
Free debt forgiveness for loans
Which piece of information on a credit report helps lenders judge risk?
Too many closed accounts were paid off satisfactorily
Late payment history
Different addresses on file
One joint account
Who is legally allowed to check your credit report?
Landlords and insurance companies
The police
Random employees at work
Your spouse
How can a larger down payment help when buying a house or car?
Increases the total borrowed
Raises interest rates
Reduces the loan amount and interest paid
Eliminates monthly payments
BONUS: Which loan type usually has the highest interest rate?
Mortgage
Auto loan
Credit card
Student loan
