WISE Review: Credit

Which of the following is a source of credit that typically charges high interest rates for consumers with low credit scores?

• A) Banks and credit unions

• B) Finance company/Consumer Finance Company

• C) Government agencies

• D) Family and friends

Anika is trying to manage her student loans effectively. What is a good practice she should follow?

• A) Ignoring changes in address

• B) Defaulting on loans

• C) Comparison shopping

• D) Avoiding communication with lenders

Sophia is considering applying for a credit card and wants to understand the costs involved. What does APR stand for in the context of credit?

• A) Annual Payment Rate

• B) Annual Percentage Rate

• C) Annual Premium Rate

• D) Annual Penalty Rate

Which of the following is a benefit of credit?

• A) Increased debt

• B) Access to money for future purchases

• C) Higher interest rates

• D) Limited borrowing capacity

Abigail is considering different ways to borrow money. Which of the following is considered a loan from a credit card company?

• Installment loans

• Student loans

• Credit cards

• Personal loans

Olivia is applying for a loan to start her own business. The bank is assessing her application and wants to evaluate her integrity and trustworthiness. Which of the Five C’s of credit is the bank focusing on?

• Capacity

• Character

• Collateral

• Capital

James is trying to improve his credit score. Which factor can negatively impact his credit score?

• Paying bills on time

• Low debt to credit ratio

• High debt to credit ratio

• Applying for fewer loans

Hannah is applying for a loan and her bank mentions her FICO score. What does FICO stand for?

• Financial Institution Credit Organization

• Fair Isaac Corporation

• Federal Income Credit Office

• Fiscal Information Credit Organization

Priya is applying for a loan to start her new business. The bank is evaluating her application based on the Five C’s of credit. Which of the following is NOT a factor considered in this evaluation?

• Conditions

• Capacity

• Creativity

• Collateral

What is the effect of a higher down payment on monthly payments for a loan?

• Increases the monthly payments

• Decreases the monthly payments

• Has no effect on monthly payments

• Doubles the monthly payments