l9+l10 Q&A
Which of the following is an example of a secured loan?
a. A student loan
b. A home mortgage
c. A debt-consolidation loan
d. A personal loan - (correct answer)The correct answer is (B).Secured loans are those
secured by collateral that may be repossessed if the loan is not repaid as agreed.
Mortgages are secured because the house is considered collateral toward the debt.
The FICO score calculation includes all of the following EXCEPT
a. credit card payment history.
b. credit utilization.
c. credit mix.
d. salary increases. - (correct answer)The correct answer is (D).The FICO score is
calculated using a formula including payment history, debt burden/credit utilization,
credit history, new credit, and types of credit. Salary increases do not impact a person's
FICO score.
Which of the following is one of the major credit reporting bureaus?
a. Fair Isaac Corporation
b. Experian
c. Vantage
d. Vanguard - (correct answer)The correct answer is (B).Experian, TransUnion, and
Equifax are the three major credit reporting bureaus.
Lisa has a credit score of 650. She wants to improve her credit score before buying a
house. What can she do to improve her credit score?
a. Make consistent, timely payments.
b. Open new credit card accounts.
, c. Reduce her credit mix.
d. Close credit card accounts. - (correct answer)The correct answer is (A).Payment
history is a key factor in a good credit score. Therefore Lisa should start making more
consistent, timely payments to improve her credit score.
Which of the following individuals most likely has the highest credit score?
a. Michaela has two credit cards, credit utilization of 15 percent, an installment loan, a
mortgage, and a perfect payment history for 3 years.
b. Andrew has a 30-year mortgage in the 10th year with a perfect payment history, and
the mortgage is his only debt.
c. June has four credit cards, credit utilization of 50 percent, and a perfect payment
history for 10 years.
d. Will has one credit card with a $50,000 limit. - (correct answer)The correct answer is
(A).Payment history, credit utilization, and mix of credit are critical to credit scores.
Michaela has a lower utilization and a broader mix of credit.
All of the following are advantages of a credit card EXCEPT:
a. Credit cards are similar to a line of credit.
b. Credit cards permit the purchase of goods and services even when funds are low.
c. Credit cards generally have higher interest rates than other sources of credit.
d. Credit card fraud is relatively low and easy to contest. - (correct answer)The correct
answer is (C).Interest rates are generally higher for credit cards than for other sources
of credit. This is not an advantage.
Which of the following is best known for creating credit scores?
a. The Fair Isaac Corporation
b. Fidelity
c. Equifax
d. TransUnion - (correct answer)The correct answer is (A).The Fair Isaac Corporation
(FICO) is best known for creating credit scores.
Which of the following is an example of a secured loan?
a. A student loan
b. A home mortgage
c. A debt-consolidation loan
d. A personal loan - (correct answer)The correct answer is (B).Secured loans are those
secured by collateral that may be repossessed if the loan is not repaid as agreed.
Mortgages are secured because the house is considered collateral toward the debt.
The FICO score calculation includes all of the following EXCEPT
a. credit card payment history.
b. credit utilization.
c. credit mix.
d. salary increases. - (correct answer)The correct answer is (D).The FICO score is
calculated using a formula including payment history, debt burden/credit utilization,
credit history, new credit, and types of credit. Salary increases do not impact a person's
FICO score.
Which of the following is one of the major credit reporting bureaus?
a. Fair Isaac Corporation
b. Experian
c. Vantage
d. Vanguard - (correct answer)The correct answer is (B).Experian, TransUnion, and
Equifax are the three major credit reporting bureaus.
Lisa has a credit score of 650. She wants to improve her credit score before buying a
house. What can she do to improve her credit score?
a. Make consistent, timely payments.
b. Open new credit card accounts.
, c. Reduce her credit mix.
d. Close credit card accounts. - (correct answer)The correct answer is (A).Payment
history is a key factor in a good credit score. Therefore Lisa should start making more
consistent, timely payments to improve her credit score.
Which of the following individuals most likely has the highest credit score?
a. Michaela has two credit cards, credit utilization of 15 percent, an installment loan, a
mortgage, and a perfect payment history for 3 years.
b. Andrew has a 30-year mortgage in the 10th year with a perfect payment history, and
the mortgage is his only debt.
c. June has four credit cards, credit utilization of 50 percent, and a perfect payment
history for 10 years.
d. Will has one credit card with a $50,000 limit. - (correct answer)The correct answer is
(A).Payment history, credit utilization, and mix of credit are critical to credit scores.
Michaela has a lower utilization and a broader mix of credit.
All of the following are advantages of a credit card EXCEPT:
a. Credit cards are similar to a line of credit.
b. Credit cards permit the purchase of goods and services even when funds are low.
c. Credit cards generally have higher interest rates than other sources of credit.
d. Credit card fraud is relatively low and easy to contest. - (correct answer)The correct
answer is (C).Interest rates are generally higher for credit cards than for other sources
of credit. This is not an advantage.
Which of the following is best known for creating credit scores?
a. The Fair Isaac Corporation
b. Fidelity
c. Equifax
d. TransUnion - (correct answer)The correct answer is (A).The Fair Isaac Corporation
(FICO) is best known for creating credit scores.
