Credit Quiz

What is credit?

• An arrangement in which you receive goods, services, or money in exchange for a promise to repay at a later date

• A numerical measure of creditworthiness

• A detailed record of your credit history

• The proportion of revolving credit available

Why is credit important?

• It can help you show creditworthiness for larger purchases

• It can save you money on interest rates

• It can affect various aspects of your financial life

• All of the above

Which component of creditworthiness is based on how frequently a person makes their monthly payments on time?

• Payment History

• Amount Owed

• Length of Credit History

• New Credit Applications

What does the debt-to-income ratio compare?

• How much debt you must pay vs. how much income you are bringing in

• The amount of credit you are using compared to your total credit

• The length of time your accounts have been open

• The types of credit you have

Which type of credit is often in the form of a credit card?

• Revolving Credit

• Installment Credit

• Credit Score

• Credit Report

What is the consequence of declaring bankruptcy?

• Having to sell your property to pay your debt

• Difficulty in borrowing in the future

• A bankruptcy staying on your credit reports for up to 10 years

• All of the above

What is the recommended percentage of available credit to keep open?

• 30%

• 50%

• 70%

• 90%

What is the best way to avoid paying interest on a credit card?

• Pay off the balance at the end of the month

• Make only the minimum payment

• Max out the credit limit

• Don't use a credit card

Which factor is not considered in calculating a credit score?

• Payment History

• Amount Owed

• Length of Credit History

• Debt-to-Income Ratio

What is the purpose of obtaining a credit report?

• To review your credit history and check for errors

• To determine your creditworthiness

• To dispute any errors on the report

• All of the above