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Emery applies for a loan online to help cover living costs while in college. Later, she notices her payments aren't impacting the balance much. Looking closer, she finds extra fees in the agreement. Which type of predatory loan offer did Emery experience? Hidden fees Bait and switch Payday loan Phishing scam

Hidden fees

How can you spot identity theft by looking at the personal section of your credit report? If you see hard inquiries If you see credit lines that you have opened If you see your accounts If you see an address that isn't yours

If you see an address that isn't yours

Which statement is correct about Annual Percentage Rate (APR)? It has nothing to do with how much interest you pay. It stands for Amortized Percentage Rate. It is the interest rate you pay on balances you carry over from month to month. It is better for the borrower if the rate is higher.

It is the interest rate you pay on balances you carry over from month to month.

What habit lowers your credit score? Pay your bills late Decrease your credit card balance Schedule automatic bill payment Check your credit report

Pay your bills late

Elliott renovates his home using a loan that requires him to sign over the title to his car if he doesn't pay as promised. What type of loan does Elliott have? Secured loan Education loan Interest-free loan Unsecured loan

Secured loan

Which items do credit card and lending companies use to determine whether to lend you money or not? Your credit score Your credit bulletin Your credit discount Your credit dispatch

Your credit score

What is the best definition of a credit report? A history of how you pay back loans and credit cards A number that shows a snapshot of your credit at a specific moment in time A number that shows how much of your overall credit you're using A period of time between when you spend money and when the company charges you interest

A history of how you pay back loans and credit cards

Why is it important to find a credit card with a lower APR? A lower APR means you have more time to pay off your balance. A lower APR means you pay less in interest A lower APR gives you a better credit history. A lower APR impacts your grace period.

A lower APR means you pay less in interest

What is the best definition of a credit score? A number that shows a snapshot of your credit at a specific moment in time A period of time between when you spend money and when the company charges you interest A number that shows how much of your overall credit you're using A history of how you pay back loans and credit cards

A number that shows a snapshot of your credit at a specific moment in time

Chris wants to get a cosigner for a car loan. Which person would be the best choice? A person with a good credit history and a car and house A person with bad credit but a steady job. A person with no assets (car, house, or financial account) A person with some late payments on their credit card

A person with a good credit history and a car and house

What kind of credit inquiry has no effect on your credit score? A soft inquiry has no effect on your credit score. Both hard and soft inquiries have an effect on your credit score. A hard inquiry has no effect on your credit score. Neither hard nor soft credit inquiries have an effect on your credit score.

A soft inquiry has no effect on your credit score.

Which action is best if you suspect you're the victim of identity theft? Check your credit report Change your email address Get a PO box Change your phone number

Check your credit report

Which is the best way to lower credit utilization to an acceptable level? Increase your credit card balance Decrease your credit card balance Apply for more credit cards Close credit cards

Decrease your credit card balance

Michael noticed an inaccuracy in his credit report and he is interested in applying for a new credit card next month. Which action should he take? He should ask one of the credit bureaus to issue a fraud alert. He should ask all three credit bureaus to freeze his credit. He should call the police. He should create a fraud report at the FTC.

He should ask one of the credit bureaus to issue a fraud alert.

Which of these are long-term impacts of having a good credit history? It's easier to pay for major purchases like cars, houses, and education. It lets you buy the things you want like clothes or cellphones. It gives you freedom to shop around for the best deal on tech. It prevents you from spending money on things you want instead of things you need.

It's easier to pay for major purchases like cars, houses, and education.

What is a good strategy if you want to improve your credit score? Minimize new applications for credit Increase your account balance Pay your credit card bills late once in a while Overdrawing your bank balance

Minimize new applications for credit

What is the definition of freezing your credit? No one can use your credit cards to make a purchase. You can only use your credit cards if you notify one of the credit reporting agencies. No one can open a credit card in your name. The credit reporting company will call to check when someone tries to open a new account.

No one can open a credit card in your name.

Which is the best strategy for paying your credit card bill? a) Pay the entire balance every month. b) Make no monthly payments at all. c) Pay the minimum payment every month. d) Pay half the balance every month.

Pay the entire balance every month.

A lender offers Frank a high-interest loan based on how much he makes at his job. He'll have to pay it back quickly too, within the next month. Which type of predatory loan offer did Frank experience? Bait and switch Hidden fees Phishing scam Payday loan

Payday loan

Which best describes the difference between secured and unsecured loans? Secured loans usually have higher interest rates than unsecured loans Secured loans do not appear on your credit report, while unsecured are reported Secured loans require collateral, while unsecured loans do not Secured loans have more flexible payment plans than unsecured loans

Secured loans require collateral, while unsecured loans do not

Chris asks Sarah to cosign, but she says that she doesn't have a good credit history. Which of the following make her unable to cosign for Chris? She has made late payments which affects her character. She has very little debt which affects her capacity. She owns her condo which affects her collateral. She has a good character since she pays all credit card bills in full.

She has made late payments which affects her character.

How do loan terms affect the cost of credit? Shorter loan terms have higher monthly payments and lower overall interest Longer loan terms have lower monthly payments and lower interest Loan terms are based on your pay schedule and how often you get paychecks Loan terms only apply to loans with collateral but do not apply to those without collateral

Shorter loan terms have higher monthly payments and lower overall interest

What is the correct definition of a cosigner for a loan? Someone who will promise to pay a loan if the borrower doesn't. Someone who will pay a loan for a borrower. Someone who will pay the electric bills for a borrower. Someone who signs the loan documents.

Someone who will promise to pay a loan if the borrower doesn't.

What is the correct definition of capacity for potential cosigners? The cosigner's current financial situation The cosigner's credit history The cosigner's financial assets, such as a house or car The cosigner's past record of paying on time

The cosigner's current financial situation

What is the correct definition of collateral for potential cosigners? The cosigner's credit history The cosigner's financial assets, such as a house or car The cosigner's past record of paying on time The cosigner's current financial situation

The cosigner's financial assets, such as a house or car

If you fear you've been the victim of identity fraud, who do you contact to freeze your credit? The credit reporting agencies—Experian, TransUnion, and Equifax The Federal Communications Commission (FCC) A private detective Credit card companies where you might open an account

The credit reporting agencies—Experian, TransUnion, and Equifax

What is the correct definition for the grace period? The amount you pay for your card each year The time between when you make a purchase using the credit card and the date when the credit card company begins charging you interest The amount of time you have to make late payments The amount of time you have to pay your secured deposit

The time between when you make a purchase using the credit card and the date when the credit card company begins charging you interest

What is a way to tell from your credit report that you've been the victim of identity fraud? Your address is correct You remember opening every account on your credit report. Your credit history starts when you opened your first credit account or loan. There are accounts you don't recognize in your credit report.

There are accounts you don't recognize in your credit report.

Why would a person refuse to cosign for a loan? They are not prepared to take on another financial obligation. They want to help the person applying for a loan. They can make payments if the borrower doesn't. They trust the person who's applying for the loan.

They are not prepared to take on another financial obligation.

Why would a borrower get a cosigner for a loan? They can't qualify for a loan by themselves. They need help evaluating the loan terms. The borrower can handle the entire loan themselves. They want to open a savings account.

They can't qualify for a loan by themselves.

Which of these criteria make a person a good cosigner? They have a steady job. They rent an apartment. They have many debts. They pay their bills late

They have a steady job.

Why do lending and credit card companies use a borrower's Social Security number when opening an account? To withdraw taxes To assign an interest rate To ensure borrowers are US citizens To protect against fraud

To protect against fraud

What's the difference between a freeze and an alert? With a credit freeze, you can apply for new credit but you can't use your credit cards, while with a fraud alert, you can. With a credit freeze, you can apply for new credit, while with a fraud alert, you can't. With a credit freeze, you can't apply for credit, and it's the same for a fraud alert. With a credit freeze, you can't apply for any new credit, while with a fraud alert, you can.

With a credit freeze, you can't apply for any new credit, while with a fraud alert, you can.

You don't have any credit, but when you check with a credit bureau, they have a credit report for you. What can you conclude? You are not the victim of the identity theft. The credit bureau made a clerical error. You could be the victim of identity theft. There is nothing to worry about.

You could be the victim of identity theft.

What does an account you don't recognize on your credit report mean? You may be the victim of identity fraud. You're not the victim of identity fraud. Your credit report is valid. Your credit report is inoperative.

You may be the victim of identity fraud.

Why is placing a fraud alert an effective way of dealing with inaccuracies in a credit report? No one can share your credit report with a credit card or lending company. No one can use your credit cards to make a purchase. You will be contacted when someone tries to open a new account in your name. You can only use your credit cards if you notify one of the credit reporting agencies.

You will be contacted when someone tries to open a new account in your name.

Which credit utilization rate would be preferable to a lender on a credit card application? a) 27.50% b) 43.00% c) 76.30% d) 83.00%

a) 27.50%

What statement is correct about grace periods? a) A grace period is the time between making a purchase and when the company begins charging you interest. b) Every credit card has a grace period. c) You are charged interest during the grace period. d) A short grace period is better for the borrower.

a) A grace period is the time between making a purchase and when the company begins charging you interest.

Which action could help improve your credit history? a) Always pay your credit card bill on time. b) Leave credit card bills outstanding. c) Only get a debit card and avoid credit cards. d) Make a major purchase that you can't afford right now.

a) Always pay your credit card bill on time.

Why does higher credit utilization decrease your credit score? a) Because lenders feel that you can't handle more debt b) Because lenders feel that you are unreliable c) Because lenders are unsure of your ability to handle your account d) Because lenders think you are able to take on more debt

a) Because lenders feel that you can't handle more debt

How do lenders evaluate if a borrower or cosigner will pay them back? a) Capacity, collateral, character b) Cadence, collateral, calendar c) Callousness, capacity, character d) Capacity, criticism, character

a) Capacity, collateral, character

Aisha needs a loan to finance her latest startup. She wants a loan with the lowest overall interest costs. She's considering a 3-year loan with an 8% fixed interest rate or a 5-year loan with a 6% fixed interest rate. Why would Aisha pick the 3-year loan? a) It has a lower total cost. b) It has a smaller monthly payment c) It has a lower interest rate. d) It has a higher loan amount.

a) It has a lower total cost.

Which entries on a credit report will decrease your credit score? a) Late payments b) Bill paid on time c) Current address d) Soft inquiries

a) Late payments

Which type of card impacts your credit history? a) Student credit card b) Debit card c) Driver's License d) State ID Card

a) Student credit card

What is the correct definition of character for potential cosigners? a) The cosigner's past record of paying on time b) The cosigner's credit history c) The cosigner's financial assets, such as a house or car d) The cosigner's current financial situation

a) The cosigner's past record of paying on time

What is a reason to pay more than the minimum payment due on your credit statement each month? a) You save money on interest. b) It takes more time to pay off a balance. c) It hurts your creditworthiness. d) Your credit utilization rate stays the same.

a) You save money on interest.