Q1/Q2 Review

What is the principal amount in a loan?

• The total amount of interest paid

• The original amount of money borrowed

• The total amount of fees charged

• The amount of money left to repay

What does interest represent in a loan?

• The original amount borrowed

• The cost of borrowing money

• The total amount of debt owed

• The length of the loan term

Which of the following is a benefit of using credit?

• It eliminates the need to save money

• It allows you to make purchases without cash

• It guarantees lower prices on goods

• It increases your monthly expenses

What is a credit score?

• A measure of your income level

• A numerical representation of your creditworthiness

• A record of your employment history

• A list of your monthly expenses

Which factor has the highest impact on your credit score?

• Length of credit history

• Credit mix

• Payment history

• New credit

How is the interest rate usually expressed?

• As a fixed amount

• As a percentage of the principal

• As a total repayment amount

• As a monthly fee

Why is building a credit history important?

• It helps you avoid paying taxes

• It is essential for obtaining loans and financial products

• It guarantees higher income

• It reduces your monthly bills

Which of the following is NOT a factor in calculating your credit score?

• Payment history

• Amounts owed

• Length of credit history

• Monthly income

What does APR stand for?

• Annual Payment Rate

• Annual Percentage Rate

• Annual Principal Rate

• Annual Payment Ratio

What is a credit score used for?

• Determining your monthly income

• Approving loans and setting interest rates

• Calculating your annual taxes

• Determining your credit card limit