Managing Credit Review

All of the following purchases can be impacted by your credit report EXCEPT…

• Getting your own cell phone plan

• Leasing an apartment

• Applying for a mortgage to buy a house

• Buying a TV with cash

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

• Payment history and types of accounts

• Amounts owed and length of credit history

• Payment history and total debt

• Length of credit history and new credit inquiries

Jane needs a cosigner for her loan. Which person would be the best for her to ask to be her cosigner?

• Her cousin, who has several fancy cars and must be rich

• Her grandfather, who lives on a tight budget

• Her sister, who shows her she has a credit score of 735

• Her neighbor, who says sharing the loan will allow him to remodel his garage at the same time

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

How does the interest rate on a loan compare for someone with excellent credit compared to someone with poor credit?

• Interest rates are the same regardless of credit score

• Interest rates are lower for someone with excellent credit

• Interest rates are higher for someone with excellent credit

• Interest is not charged for someone with excellent credit

How can your credit score impact your financial well-being?

• Only consumers with high scores are approved for credit

• Consumers with low scores get lower interest rates on loans than those with high scores

• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be

• It generally has no impact on your financial situation

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

What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time?

• Snowball method

• Make minimum payments

• High rate method

• Consolidate multiple debts into one new loan

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

Who tracks all of your credit information?

• Credit reporting agencies (Equifax, Experian and TransUnion)

• Federal government

• Consumer Financial Protection Board (CFPB)

• Lenders