FREE BUSINESS AND STUDY GAMES ABOUT

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FREE BUSINESS AND STUDY GAMES ABOUT

TYPES/MANAGINGCREDIT EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -35 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: Which best describes how a credit card works?

Answer:

The credit card company extends you a line of credit. You purchase "stuff" and then have the choice to pay the balance in full or a minimum payment each month.

Question 2: Why are secured loans considered less risky to the lender?

Answer:

Lenders can take valuable collateral if you fail to repay your loan

Question 3: A higher credit score...

Answer:

Will help you obtain a lower interest rate on an auto loan

Question 4: Secured Credit Card - The limit?

Answer:

The amount you deposit becomes your credit limit.

Question 5: Credit Score

Answer:

A three-digit number that predicts your creditworthiness, based on your credit report information.Lenders use this number to assess the likelihood that you will repay borrowed money on time.

Question 6: Avalanche Method

Answer:

Pay your minimum balances on all debt and then focus your extra money towards your debt with the highest interest rate. (This method helps you pay the least amount of interest overall)

Question 7: What is an outstanding balance?

Answer:

The amount you still owe after you have made your most recent payment

Question 8: Credit Score factors

Answer:

Payment history 35% Amounts Owed 30% Length of Credit History 15% New Credit 10% Credit Mix 10% Question 9: What are examples of secured debt that can be taken if you don't make on time payments to your lenders?

Answer:

Mortgage and Auto Loan

Question 10: Grace Period

Answer:

The period between the end of a billing cycle and the date your payment is due. During this time, you may not be charged interest as long as you pay your balance in full by the due date.

Question 11: Benefits of using a cosigner on a loan?

Answer:

You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit

Question 12: What is the advantage of paying your credit card balance in full each month?

Answer:

You avoid paying any interest and fees Question 13: Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to...

Answer:

Decrease your interest rate

Question 14: What is on my credit report?

Answer:

Your credit reports include information about the types of credit accounts you've had, your payment history and certain other information such as your credit limits.

Question 15: Credit Limit

Answer:

The maximum amount that may be borrowed on a credit card

Question 16: A fully amortized payment is split into which two components?

Answer:

The principal and the interest

Question 17: Important reasons to check your credit report?

Answer:

Accuracy and how are the different factors affecting my credit score

Question 18: Credit Card

Answer:

A plastic card that allows you to make purchases now with borrowed money, which then you must repay to the lender in one lump sum or in monthly payments with interest

Question 19: Principal

Answer:

Original amount of money borrowed, separate from interest or fees

Question 20: Snowball Method

Answer:

Pay your minimum balances on all debt and then focus your extra money towards your debt with the smallest balance.

Question 21: Down Payment

Answer:

A large sum of money you pay when taking out a loan so that the principal of your loan is smaller

Question 22: Minimum Payment

Answer:

The smallest amount of a credit card bill that a credit card holder must pay during a billing cycle to remain in good standing with the lender

Question 23: Annual Percentage Rate (APR)

Answer:

The cost you pay each year to borrow money, including fees, expressed as a percentage

Question 24: Amortization

Answer:

The paying off of debt over time in equal installments; part of each payment goes toward the loan principal while the other part goes toward interest.

Question 25: Cosigner

Answer:

Someone who legally agrees to take responsibility for a person's debt if they cannot repay it

Question 26: Fixed-Rate Loan

Answer:

A loan with an interest rate that does not change over the life of the loan

Question 27: Credit Reporting Agencies

Answer:

Credit reporting Agencies, also known as credit bureaus, are companies that compile and sell credit reports. (Equifax, Experian and TransUnion) They also track your credit information.