Review Unit 3A: Managing Credit

Paying more than the minimum payment (or paying your balance in full) is beneficial because…

• It lowers your interest rate

• The lender can’t penalize you for future late payments

• You get a discount on future purchases made with credit

• You pay less interest overall

If a person with multiple sources of debt has a goal of eliminating one or more of them in as little time as possible, which debt repayment strategy would be best?

• High interest method

• Snowball method

• Stopping payments on all debts but one so you can pay that one off faster

• Making the minimum payment

Which of the following is a type of secured debt in which the item you purchased might be seized if you fail to make payments?

• Auto loan

• Credit card

• Student loan

• Personal Loan

All of the following appear on your credit report EXCEPT…

• Your checking account balance

• Student loan payment history

• Balance owed on a car loan

• Number of active credit accounts

In general, why do so many different types of companies check your credit report?

• They’re legally required to do so by the Securities and Exchange Commission (SEC)

• To determine the price of the product or service they’re selling you

• Doing business with someone with a low credit score will also lower their credit score

• They want to make sure you’re likely to make consistent and timely payments

What should you do if you find errors in your credit report?

• Close the affected credit account(s)

• Contact the credit reporting agency or the company that provided the information

• Call the police to notify them of potential fraud

• Report the error on your taxes

The four ways to view your credit score are checking your credit ​ (a)   ​ or ​ (b)   statement, talk to a non-profit ​ (c)   , use a credit ​ (d)   service or purchase a score directly from ​ (e)   .

• card
• loan
• counselor
• score
• FICO

Which of the following categories make up most of your credit score?

• Number of recent hard inquiries

• Average length of your credit history

• Number of active credit accounts

• Payment history and credit utilization

It is best to avoid these in order to improve your payment history…

• Credit cards without a rewards program

• Late payments

• Banks that only offer one type of credit card

• Payments greater than the minimum required

It’s beneficial to use some of your available credit because…

• The interest you’ll be charged goes up for every month you don’t use any credit

• Banks require you to use some form of credit in order to have an account with them

• It shows you can responsibly use credit and builds your credit history

• Employers are less likely to hire you if you don’t have a balance on your credit card