abc. question 1 credit is an arrangement whereby you owe something, typically money, or something is...
TRANSCRIPT
Test Your KnowledgeLesson 3: A Fresh Start
Click on the letter of your choice to test your
understanding.
A B C
Question 1
Credit is an arrangement whereby
• You owe something, typically money, or something is due.A
• You receive goods, services, or money in exchange for a promise to repay at a later date.
B• You set money aside
that you can access quickly for unexpected expenses.
C
Question 2The opportunity cost of using credit is the
• Purchasing power of future money for past purchases.A
• The previous earning power of money spent on interest and fees.B
• Current purchases, interest, and fees. C
Question 3The 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
• Installment/term credit.A• Noninstallment/service
credit.B• Revolving credit.C
Question 4The price that you pay for the use of money you borrow from a lender is called
• Principal.A• Interest.B• Loan term.C
Question 5The annual percentage rate (APR) is
• The total cost of credit to the lender.A
• Finance charge expressed as an monthly rate.B
• The interest rate for the whole year. C
Question 6A credit card is
• A type of credit that requires full payment by a specified date.A
• A credit tool with a limited number of monthly transactions.B
• A high-interest, revolving, unsecured loan.C
Question 7A credit report is
• A summary of loan and bill payments kept by a credit bureau.A
• A profile of your nationality, educational attainment, and credit obligations.
B• An active data file kept by
the credit bureau for 10 years.C
Question 8Also known as your “financial GPA,” a credit score is
• An annualized number that measures how you handle your financial obligations.
A• A snapshot of your level
of risk to a lender at a specific point in time.
B• A single factor used to
make lending decisions.C
Question 9The two components that make up the greatest percentage of the total credit score are
• Length of credit history and overall credit. A
• New credit and types of credit used.B• Payment history and amounts owed.C
Question 10Having an accurate credit report is important because
• Positive information increases credit opportunities and decreases the cost of borrowing.A
• Negative information reduces credit opportunities, increases the cost of borrowing, can impact service credit, and can eliminate some job offers.B
• All of the above.C
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