Understanding Loans and Credit Scores

How can the interest paid on a home mortgage loan affect your income taxes?

• It increases your taxable income.

• It can be deducted from your taxable income, reducing the amount you owe.

• It has no effect on your income taxes.

• It is added to your tax refund.

Which of the following is NOT a factor that affects your credit score?

• Past payment history

• Amount of debt

• Your favorite color

• Number of recent credit inquiries

How does a higher credit score generally affect the interest rate you receive on a home mortgage?

• It increases the interest rate.

• It decreases the interest rate.

• It has no effect on the interest rate.

• It doubles the interest rate.

Which type of insurance would cover damage to your car in an accident?

• Medical insurance

• Car insurance

• Homeowners insurance

• Life insurance

Which of the following is a type of insurance that a business might need?

• Renters insurance

• Liability insurance

• Life insurance

• Dental insurance

If you pay $2,000 in mortgage interest in a year and you are in the 22% tax bracket, how much could you potentially save on your taxes due to this deduction?

• $440

• $220

• $2,000

• $1,560

Which of the following public records could negatively impact your credit score?

• A speeding ticket

• Bankruptcy filing

• Library fine

• Gym membership

A person with a low credit score is likely to:

• Qualify for a mortgage with a low interest rate

• Be denied a mortgage or offered a higher interest rate

• Receive a tax refund

• Have no effect on mortgage qualification

Which insurance would help pay for medical expenses after a car accident?

• Homeowners insurance

• Medical insurance

• Life insurance

• Rental car insurance

Which type of insurance is specifically designed to protect individuals who rent their homes?

• Homeowners insurance

• Renters insurance

• Car insurance

• Business insurance