Assignment #3: Credit Mid-Unit Quiz Review

What is the primary purpose of an amortization table?

• To calculate the interest rate on a loan

• To show the breakdown of each loan payment into principal and interest

• To determine the credit score of a borrower

• To list all the fees associated with a loan

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DOK Level 1: Recall

Which of the following factors can negatively impact your credit score?

• Making payments on time

• High credit utilization

• Having a long credit history

• Diversifying credit types

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DOK Level 1: Recall

If you make a late payment on your credit card, what is the most immediate consequence?

• Increase in credit limit

• Decrease in interest rate

• Late payment fee

• Improvement in credit score

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DOK Level 1: Recall

Which of the following is a key component of an amortization schedule?

• Credit score

• Loan term

• Credit card limit

• Minimum payment

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DOK Level 1: Recall

How does a high credit utilization ratio affect your credit score?

• It increases your credit score

• It has no effect on your credit score

• It decreases your credit score

• It doubles your credit score

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DOK Level 2: Skill/Concept

What is the effect of making only the minimum payment on a credit card balance?

• It reduces the interest rate

• It pays off the balance quickly

• It increases the total interest paid over time

• It improves your credit score

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DOK Level 2: Skill/Concept

Which of the following actions can help improve your credit score?

• Closing old credit accounts

• Increasing your credit utilization

• Making payments on time

• Applying for multiple credit cards at once

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DOK Level 1: Recall

Explain how amortization affects the total interest paid over the life of a loan.

• Amortization increases the interest portion of your payment from month to month

• Amortization decreases the interest portion of your payment from month to month

• Amortization has no effect on the total interest paid

• Amortization doubles the total interest paid from month to month

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DOK Level 2: Skill/Concept

What is the strategic advantage of paying more than the minimum payment on a credit card?

• It increases the credit limit

• It reduces the interest paid over time

• It decreases the credit score

• It extends the loan term

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DOK Level 3: Strategic Thinking

How does the length of your credit history impact your credit score?

• Longer credit history generally improves your credit score

• Longer credit history generally decreases your credit score

• Length of credit history has no impact on credit score

• Longer credit history doubles your credit score

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DOK Level 2: Skill/Concept