Credit Recap

1. What are the two most important factors in calculating your credit score?

• 1. Payment history and types of accounts

• 1. Amounts owed and length of credit history

• 1. Payment history and total debt

• 1. Length of credit history and new credit inquiries

4. All of the following would show up on a credit report EXCEPT...

• 1. Salary of your current job

• 1. Payment history of your car loan

• 1. Credit card payment history

• 1. Student loan activity

6. What is the single best way for someone to improve their credit score?

• 1. Cancel credit cards

• 6. Get a car loan

• 6. Make on-time payments

• 6. Check credit score

10. You have a credit card that you use regularly for small purchases with the goal of improving your credit score. Which strategy would have the GREATEST positive impact?

• 1. Put the credit card in a drawer instead and don't ever use it

• 1. Make the minimum payment required on your credit card every month by the due date

• 1. Always carry a balance from month to month

• 1. Use less than 30% of the credit limit and pay it off in full every month by the due date

13. What is an advantage of using a credit card?

• 13. Since it is tied directly to your checking account, it prevents you from spending money you do not have

• 1. It will not affect your credit score or credit history

• 13. If you need to carry a balance, the interest rates are generally quite low (less than 5%)

• 13. You can make an emergency purchase that you otherwise don’t have the money to pay for right now

16. Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?

• 1. Paying down balances on your credit card accounts

• 1. Paying your bills on-time

• 16. Applying for multiple credit cards

• 16. Decreasing your utilization of credit

9. Which of these credit payback strategies would lead to the HIGHEST overall cost?

• 9. Paying 20% of your credit card balance every month on time

• 9. Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

• 1. Paying off your credit card bill in full every month

• 9. Making the minimum payment (3% of your credit card balance) every month on time

15. A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.

• 1. higher, less

• 15. higher, more

• 15. lower, less

• 15. lower, more

14. Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.

• 14. The 25 days after the end of the billing cycle would be the 'grace period'.

• 1. If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest

• 14. If you pay your previous balance in full after the due date, the credit card company will not charge you interest

• 14. 25 days is an exceptionally long period without paying a credit card bill

25. Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?

• 25. This enables the credit card company to make more money

• 25. This helps cardholders develop financial independence

• 25. This allows the card holder to pay their bill quickly and close the card when they’re ready

• 1. This is required by federal law for tax purposes