Unit 5 Quiz: Credit

Banks and lenders use credit scores to determine . . .

• The likelihood someone is able to repay debt
• A person's future outlook
• How much collateral someone has available to put up for a loan
• How successful someone is

_____________ require the borrower to put up collateral for the loan

• Unsecured loans
• Interest rates
• Revolving credit
• Secured loans

Which of the following is part of the formula that determines a person's credit score?

• Their income level during a one year period
• The percent of income that they invest into mutual funds
• The dollar amount in their savings funds
• Their history of payments made to lenders

Which is an example of an appreciating asset?

• A computer used for business purposes
• A new car purchased within the past 6 months
• A piece of farming equipment
• A home

What is the best way to avoid falling into debt?

• Use credit to pay for large expenses now so that you have plenty of time to pay it off
• Only buy things that you can purchase with cash, or whose balance you can pay off in full every month
• Use airline miles earned through a credit card to help pay for a vacation
• Take out a small loan for any purchases over $1,000

When looking over your credit report, it's important to make sure . . .

• No lines of credit have been opened under your name without your knowledge
• Your credit score is over 700
• At least five businesses have requested your credit report
• The information listed is over 10 years old

How does being irresponsible with a credit card impact your credit score? Consider the consequences of bad credit.

• It improves your credit score because you are using more of your available credit.
  

• It can lower your credit score, making it harder to get loans, rent an apartment, or secure low-interest rates.
  

• It has no impact on your credit score as long as you make the minimum payments.
  

• It increases your credit limit over time, giving you more spending power.

A HELOC is a loan that...

• A loan used to move several debts into one payment. They’re usually for a fixed amount and have fixed payments.

• A revolving credit account. You have a credit limit and you can buy multiple things at different times

• Used by owners to borrow against the equity in their home.

• A loan that typically lasts 15-30 years and is used to buy a house.

A Mortgage is...

• A loan used to move several debts into one payment. They’re usually for a fixed amount and have fixed payments.
  

• A revolving credit account. You have a credit limit and you can buy multiple things at different times
  

• Used by owners to borrow against the equity in their home.
  

• A loan that typically lasts 15-30 years and is used to buy a house.
  

A Personal Loan is...

• A loan used to move several debts into one payment. They’re usually for a fixed amount and have fixed payments.
  

• A revolving credit account. You have a credit limit and you can buy multiple things at different times
  

• Used by owners to borrow against the equity in their home.
  

• A loan that typically lasts 15-30 years and is used to buy a house.