A B C

Question 1

Credit is an arrangement whereby A • You owe something, typically money, or something is due.

• You receive goods, services, or money in exchange for a promise to repay at a later date.

• You set money aside that you can access quickly for unexpected expenses.

Question 2

The opportunity cost of using credit is the A B C • Purchasing power of future money for past purchases.

• The previous earning power of money spent on interest and fees.

• Current purchases, interest, and fees.

Question 3

The type of credit that you get when a lender allows you to borrow an amount for a specific purpose for a specific amount of time at a given interest rate is called A B C • Installment/term credit.

• Noninstallment/service credit.

• Revolving credit.

Question 4

The price that you pay for the use of money you borrow from a lender is called A B C •Principal.

•Interest.

•Loan term.

Question 5

The annual percentage rate (APR) is A B C • The total cost of credit to the lender.

• Finance charge expressed as an monthly rate.

• The interest rate for the whole year.

A credit card is

Question 6

A B C • A type of credit that requires full payment by a specified date.

• A credit tool with a limited number of monthly transactions.

• A high-interest, revolving, unsecured loan.

A credit report is

Question 7

A B C • A summary of loan and bill payments kept by a credit bureau.

• A profile of your nationality, educational attainment, and credit obligations.

• An active data file kept by the credit bureau for 10 years.

is

Question 8

Also known as your “financial GPA,” a credit score A B C • An annualized number that measures how you handle your financial obligations.

• A snapshot of your level of risk to a lender at a specific point in time.

• A single factor used to make lending decisions.

Question 9

The two components that make up the greatest percentage of the total credit score are A B C • Length of credit history and overall credit. • New credit and types of credit used.

• Payment history and amounts owed.

Question 10

Having an accurate credit report is important because A B C • Positive information increases credit opportunities and decreases the cost of borrowing.

• Negative information reduces credit opportunities, increases the cost of borrowing, can impact service credit, and can eliminate some job offers.

• All of the above.

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