7. Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

Ask his parents to cosign a credit card or add him as an authorized user on their credit card

Always say "credit" when asked "credit or debit?" at a store

Any time he borrows money from a friend or family member, be sure to pay it back promptly

Take out some private student loans, even though he doesn't need them because he has grants and scholarships

8. Which of the following individuals or groups would be the LEAST likely to look at your credit score?

A bank representative who is helping you open a savings account

Someone interviewing you for a job

An insurance company reviewing your applicant for auto insurance

9. Frank and Jasmere are each shopping for a new car for themselves. Each will need a $20,000 loan that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?

Jasmere's monthly payment on the loan will be about $100 more than Frank's payment

Over the five year period, Jasmere and Frank will pay the same amount for the car loan

Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment

Lenders are not allowed to charge people different interest rates based on their credit scores

10. You have a credit card that you use regularly for small purchases with the goal of improving your credit score. Which strategy would have the GREATEST positive impact?

Use less than 30% of the credit limit and pay it off in full every month by the due date

Always carry a balance from month to month

Regardless of how much your balance is, make the minimum payment required on your credit card every month by the due date

Put the credit card in a drawer instead and don't ever use it

11. What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time?

Consolidate multiple debts into one new loan

12. Who tracks all of your credit information?

Credit reporting agencies (Equifax, Experian and TransUnion)

Consumer Financial Protection Board (CFPB)

13. What is the general timeline to establish your first credit score?

Six months after you first actively use your credit

As soon as you apply for a credit card or loan

Once you pay all of your credit balances in full

14. You find an error on your credit report: Your credit card account indicates that you are 60 days late on your payment but you have bank records indicating that you have always made on-time payments. What should you do FIRST?

Contact the credit card company to have them fix it

Contact the credit reporting agency

Wait a few weeks to see if it gets resolved

Call the police to report the possible identity theft

15. Which of the following things should you have ready when contacting a credit reporting agency to report an error on your credit report?

An explanation of the mistake and any evidence you have supporting your claim

Your preferred payment method to pay for fixing the error

A list of all of your financial accounts and balances

References from a non-family member vouching for your creditworthiness

16. Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?

Applying for multiple credit cards

Paying down balances on your credit card accounts

Decreasing your utilization of credit

17. Which best describes the Debt Snowball method for paying off debt?

Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance

Only make payments on your smallest debt first, then move on to your second smallest debt, and so on

Once your debt "snowballs" out of control, hire a certified credit counselor to help get your finances back on track

Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the highest balance

18. Which of these represents a potential consequence of neglecting to pay your federal student loans?

Wages or tax refunds can be garnished

19. What benefits do you receive by taking out a loan with a cosigner?

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

You don’t get penalized for late payments

You get a discount on future loans after this one is paid off

You automatically get the same credit score as the cosigner once the loan is paid off

20. You're paying your credit card bill and your student loan payment each month, but you're falling behind on your auto loan payment. Which friend's advice could have a NEGATIVE impact on your credit score?

Debbie says, "Stop making the credit card payment for a few months until you're caught up on the auto loan."

Joanie says, "Call the auto lender and see if you can negotiate a lower monthly payment or some other deal."

Angie says, "Pick up a second job for as long as it takes to accumulate enough money to make all your payments, even if it means losing time with friends and family."

Betty says, "Cut down to a bare bones budget, where your necessities and your debt repayments take first priority. Cut everything non-essential."

21. Which response best completes the sentence "It's best to begin establishing credit when you're young because ________" ?

You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card

Accessing credit only becomes more expensive as you get older

Negative marks on your credit report go away faster for younger borrowers

Credit scores are free for anyone under the age of 25

22. Review this partial credit report, and then choose the response below that accurately depicts the information on the report.

This borrower was 30 days late on their May 2015 payment

The borrower paid a $30 fee in February 2015

This borrower was never late with any of their credit payments

This borrower's most recent payment was $30

23. The amount you can charge to a secured credit card is limited by…

The amount of money you deposit into an account as collateral

The total amount of money across all your bank accounts

How long you’ve had an account with the bank

25. How can your credit score impact your financial well-being?

Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be

Only consumers with high scores are approved for credit

Consumers with low scores get lower interest rates on loans than those with high scores

It generally has no impact on your financial situation

What is a credit score and how is it calculated?

A credit score is a numerical representation of an individual's creditworthiness. It is calculated based on various factors such as payment history, credit utilization, length of credit history, types of credit used, and new credit inquiries.

A credit score is a number that represents an individual's popularity. It is calculated based on the number of friends and followers they have on social media.

A credit score is a rating given to individuals based on their social media activity. It is calculated by analyzing their posts, likes, and followers.

A credit score is a measure of an individual's income and assets. It is calculated based on the total value of their possessions and their annual salary.

Managing Credit- Unit Test

Authored by Farrah Tuttle

others

11th Grade

Used 9+ times

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OPEN ENDED QUESTION

30 sec • Ungraded

Hour/Class:

Evaluate responses using AI:

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

1. What are the two most important factors in calculating your credit score?

Payment history and types of accounts

Amounts owed and length of credit history

Payment history and total debt

Length of credit history and new credit inquiries

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

2. Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…

Reducing spending by canceling some of her streaming subscriptions

Taking extra shifts at work to increase her income

Making more than the minimum required payment on her debt

Applying for another credit card to use in case she runs out of cash paying off her debt

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

3.Which of the following statements about credit scores does this bar graph support?

Credit scores tend to drop as you grow older because you are more likely to miss a payment at some point

It is more difficult for young people to borrow because they have less payment history for a lender to rely upon

When young people borrow, they are likely to have lower interest rates because their credit scores are lower

It is easier for young people to get loans at lower interest rates because they are likely to have never been late with a payment

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

4. All of the following would show up on a credit report EXCEPT...

Salary of your current job

Payment history of your car loan

Credit card payment history

Student loan activity

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

5. Which of the following methods of getting your credit score would involve paying a fee?

Checking your credit card or loan statement

Talking to a non-profit counselor

Checking creditkarma.com

Getting a score from myFICO.com

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

6. Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

Cancel his credit cards

Make on-time payments

Get a car loan

Check his credit score

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