Understanding Credit Ratings and Borrowing

What is a credit rating?

• A measure of a person's income level

• An evaluation of a borrower's creditworthiness

• A type of bank account

• A government-issued identification number

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

• Consistently paying bills on time

• Having a high credit card balance

• Having a diverse mix of credit accounts

• A long history of credit use

What is the primary benefit of having a high credit rating when borrowing money?

• Access to more credit cards

• Lower interest rates on loans

• Higher monthly payments

• Longer loan terms

Which of the following is NOT a common type of credit rating agency?

• Equifax

• TransUnion

• Experian

• PayPal

If you have a credit rating of 750, how is your credit generally classified?

• Poor

• Fair

• Good

• Excellent

What is the typical range for credit scores in Canada?

• 300 to 900

• 100 to 800

• 200 to 700

• 400 to 1000

Which borrowing option typically has the highest interest rate?

• Mortgage

• Personal loan

• Credit card

• Line of credit

How can you improve your credit rating?

• Max out your credit cards

• Pay off debts promptly

• Close old credit accounts

• Apply for multiple loans at once

What is the impact of a hard inquiry on your credit report?

• It increases your credit score

• It has no effect on your credit score

• It temporarily lowers your credit score

• It permanently lowers your credit score

Which of the following is a secured form of borrowing?

• Credit card

• Personal loan

• Mortgage

• Payday loan