True/False
Indicate whether the statement is true or
false.
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1.
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Service credit is often provided by utility companies and doctors.
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2.
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A cosigner with good credit may be required by the bank if there is no
collateral for the loan.
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3.
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No interest is charged on the unused portion of a line of credit.
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4.
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The balance on a charge card must be paid in full each month.
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5.
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Reviewing your credit report can help prevent misinformation and identity
theft.
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Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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6.
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Protections offered by many credit card companies include
a. | replacement of goods damaged or stolen within 90 days of purchase | b. | relief from
liability of fraudulent charges made without your knowledge | c. | emergency
replacement for a lost card within 24 hours | d. | all of these |
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7.
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Which of the following is not a benefit of using credit
cards?
a. | convenience and rewards | c. | protections from
fraud | b. | increased spending power | d. | paying interest on balance |
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8.
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Charge cards are a form of credit card that must be paid off in full each month.
These cards do not have interest fees, but instead have an annual fee or service charge. Which of the
following cards is considered a charge card?
a. | VISA® | c. | DISCOVER® | b. | American Express® | d. | MasterCard® |
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9.
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Curtis has a preapproved loan at his local bank. He can borrow against it, pay
it back and borrow again as needed. What has Curtis’s bank extended to him?
a. | A consumer loan. | c. | A line of credit. | b. | A revolving credit. | d. | A credit card. |
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Use the scenario on Georgia to answer
questions 10-15.
Georgia has purchased a home that she financed through her local
bank. Her loan is a mortgage loan for 30 years, and she makes monthly payments. When she completed
the loan paperwork, her banker obtained a statement of her credit history to determine her
eligibility for the loan. This report gave her a credit score. When she purchased her house
she had water, gas, electricity and cable TV services connected for her use. She also purchased a new
stove and refrigerator from the local appliance store. She financed these through the appliance store
and will pay equal monthly payments for 1 year to the store.
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10.
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What type of credit is Georgia using to obtain the utilities services?
a. | revolving credit | c. | service credit | b. | installment credit | d. | store credit |
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11.
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What type of credit is Georgia using to purchase the appliances?
a. | revolving credit | c. | service credit | b. | installment credit | d. | store credit |
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12.
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What type of report did Georgia’s banker get a copy of to determine her
loan eligibility?
a. | The banker got a copy of her driver’s license record. | c. | The banker got a
copy of her college transcript. | b. | The banker got a copy of her birth
certificate. | d. | The banker got
a copy of her credit report. |
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13.
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What did the statement that the banker obtained tell the banker about her
eligibility for the loan?
a. | It told him of her collegiate skills. | c. | It told him of her ability to repay
the loan. | b. | It told him of her ability to drive safely. | d. | It told him of her family medical
history. |
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14.
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What is the typical collateral for a mortgage loan?
a. | Her car. | c. | Her stove. | b. | Her house. | d. | Her
refrigerator. |
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15.
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Which of the following items would have the largest impact on Georgia’s
credit score?
a. | Her payment history. | c. | Her types of credit used. | b. | Her amounts
owed. | d. | Her open
accounts. |
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16.
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Which category has the largest impact on your credit score?
a. | types of credit | c. | amounts owed | b. | payment history | d. | length of credit
history |
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17.
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What does a credit score prove about you?
a. | Your ability to pay new debt. | c. | Your ability to gain new
debt. | b. | Your ability to dodge old debt. | d. | Your ability to pay old
debt. |
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18.
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What is the best way to improve your credit score?
a. | Take out new loans and miss payments. | c. | Allow incorrect information on your
credit report. | b. | Open multiple new credit card accounts. | d. | Pay your debts on or before the due
date. |
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19.
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Which credit score range is considered to be the best?
a. | 500 and below | c. | 600-700 | b. | 500-600 | d. | 700-850 |
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20.
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Which of the following is not impacted by your credit score?
a. | Your ability to get a loan. | c. | Your ability to rent an
apartment. | b. | Your ability to get a low interest rate on a low. | d. | Your ability to get a driver’s
license. |
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