Credit Basics Quiz

Credit Basics

What is a credit score?

1. a) A numerical representation of your creditworthiness
2. b) The amount of money you owe on your credit card

• c) The interest rate on your mortgage

Which of the following factors can affect your credit score?

1. a) Payment history
2. b) Length of credit history
3. c) Types of credit used

• d) All of the above

Credit Score Ranges

What is considered a good credit score range in the FICO scoring model?

1. a) 300-500
2. b) 550-650

• c) 700-850

Which of the following is NOT a major credit reporting agency?

1. a) Experian
2. b) Equifax
3. c) TransUnion

• d) Visa

Credit Card Terms

What does APR stand for in relation to credit cards?

1. a) Annual Payment Rate
2. b) Annual Percentage Rate

• c) Annual Purchase Rate

How often can you typically check your credit report for free?

1. a) Once a year
2. b) Twice a year

• c) Three times a year

Credit Management

Which of the following actions can negatively impact your credit score?

1. a) Paying bills on time
2. b) Maxing out credit cards

• c) Keeping credit card balances low

What is the recommended utilization rate for credit cards to maintain a good credit score?

1. a) 100%
2. b) 50%

• c) 30%

Credit Report Details

How long do negative items like late payments typically stay on your credit report?

1. a) 1 year
2. b) 5 years

• c) 7 years

What is the purpose of a credit report?

1. a) To show your current bank balance
2. b) To track your credit card rewards

• c) To provide a summary of your credit history and activity

Credit Concepts

What is the difference between a credit report and a credit score?

1. a) A credit report is a detailed record of your credit history, while a credit score is a numerical representation of your creditworthiness.
2. b) A credit report contains your personal information, while a credit score does not.

• c) A credit score is updated monthly, while a credit report is updated annually.

Which of the following is NOT a common type of credit?

1. a) Mortgage loan
2. b) Personal loan
3. c) Debit card

• d) Auto loan

Credit Card Details

What is the term for the maximum amount of money you can borrow on a credit card?

1. a) Credit limit
2. b) Interest rate

• c) Minimum payment

How does closing a credit card account affect your credit score?

1. a) It has no effect.
2. b) It may improve your credit score.

• c) It may lower your credit score.

Credit Terms and Laws

What is a co-signer?

1. a) Someone who borrows money from you
2. b) Someone who lends you money

• c) Someone who agrees to pay back a loan if you fail to do so

What is the purpose of a credit utilization ratio?

1. a) To determine how much money you have available to borrow
2. b) To measure how much of your available credit you’re using

• c) To calculate your annual interest payments

Credit Regulations

What is the Fair Credit Reporting Act (FCRA)?

1. a) A law that regulates the collection and use of consumer credit information
2. b) A federal agency responsible for issuing credit reports

• c) A guideline for credit card companies to follow regarding interest rates

What is the term for a period during which you can use credit without paying interest?

1. a) Grace period
2. b) Credit freeze

• c) Credit limit

Credit Score Determinants

Which of the following is NOT a factor in determining your credit score?

1. a) Age
2. b) Gender

• c) Employment history

What is the first step you should take if you find errors on your credit report?

1. a) Contact the credit bureau to dispute the errors
2. b) Ignore the errors as they won’t affect your credit score

• c) Pay off any outstanding debts mentioned in the report