Managing Credit - Unit Test

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

• Payment history and types of accounts

• Total debt and length of credit history

• Payment history and amounts owed

• Length of credit history and new credit inquiries

Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…

• Reducing spending by canceling some of her streaming subscriptions

• Taking extra shifts at work to increase her income

• Making more than the minimum required payment on her debt

• Applying for another credit card to use in case she runs out of cash paying off her debt

Which factor is NOT directly considered in calculating a credit score?

• Payment history

• Length of credit history

• Income level

• Types of credit used

What is a potential consequence of making only the minimum payment on credit card debt?

• Decreasing your credit score

• Paying more in interest over time

• Increasing your credit limit

• Improving your credit utilization ratio

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

• Closing old credit accounts

• Consistently paying bills on time

• Applying for multiple credit cards at once

• Keeping credit card balances high

Which of the following is a sign of good credit management?

• Maxing out credit cards regularly

• Having a high credit utilization ratio

• Maintaining a diverse mix of credit types

• Frequently applying for new credit

What is the recommended maximum credit utilization ratio to maintain a healthy credit score?

• 10%

• 30%

• 50%

• 70%

Which of the following is NOT a component of the FICO credit score model?

• Payment history

• Amounts owed

• Employment history

• New credit

8. Which of the following individuals or groups would be the LEAST likely to look at your credit score?

• 1. Someone interviewing you for a job

• 1. Credit card companies

• 1. An insurance company reviewing your applicant for auto insurance

• 1. A bank representative who is helping you open a savings account

12. Who tracks all of your credit information?

• 1. Credit reporting agencies (Equifax, Experian and TransUnion)

• 1. Federal government

• 1. Consumer Financial Protection Board (CFPB)

• 1. Lenders