UGBA 135 Midterm Exam Questions and
Answers Graded A+
FICO Score - Correct answer-measure of consumer credit risk
Highest FICO Score - Correct answer-850
Factors determining FICO Score - Correct answer-Credit report is based on:
-35% paying your bills on time over time
-30% your debt-to-credit ratio ( borrowing money/ credit limit)
-15% length of credit history
-10% mix of credit cards and loans (like to see things other than credit card; Rent,
any loan (e.g. leasing car))
-10% new accounts and recent applications for credit
How many FICO scores does a person have? - Correct answer-3
How do you establish good credit? - Correct answer-borrow $ and pay it back on
time according to its terms
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,How much is taken out of your paycheck for SS and Medicare? - Correct answer--
12.4% of earned income to SS
-2.9% of earned income to Medicare
Debt-to-credit ratio - Correct answer-how to calculate:
-$3000 debt, $6000 in credit :: 3000/6000 = 50% D/C ratio
-try to be below 50% || 30% is the best
Identity Theft: if you're a victim - Correct answer--close and replace all accounts
that have been tampered with or didn't open
-file a police report
If you are carrying a balance and you pay more than the minimum payment, where
does the excess go? - Correct answer-the excess is used to pay off debt of highest
interest rate, not the card with the smallest balance
credit hold on account - Correct answer--when a customer is consistently late in
making payments, has exceeded their credit limit, or is identified as a bad risk, you
can prevent additional credit purchases by placing their account on credit hold
-if hold is executed, it will count against credit
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Maximum interest on credit card account - Correct answer-no legal maximum
Who can see your credit scores? - Correct answer-
Website for free credit report (federally mandated for credit reports) - Correct
answer-annualcreditreport.com
Three credit scoring agencies - Correct answer-Transunion (tuc.com) -- Empirica
score
Equifax (equifax.com) -- Beacan score
Experian (experian.com) -- Experian model
Best time to establish credit - Correct answer-when you don't need it
aka younger i thinks
When are your credit payments due? - Correct answer-generally about 21-25 days
after your billing cycle ends
Secure vs unsecure line of credit - Correct answer-Debit is secure
Credit is unsecure (nothing to back it up other than credit history)
How does cancelling inactive credit cards affect your credit score? - Correct
answer--can lower because it will increase your d/c ratio
-if you cancel, cancel newest card first
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Answers Graded A+
FICO Score - Correct answer-measure of consumer credit risk
Highest FICO Score - Correct answer-850
Factors determining FICO Score - Correct answer-Credit report is based on:
-35% paying your bills on time over time
-30% your debt-to-credit ratio ( borrowing money/ credit limit)
-15% length of credit history
-10% mix of credit cards and loans (like to see things other than credit card; Rent,
any loan (e.g. leasing car))
-10% new accounts and recent applications for credit
How many FICO scores does a person have? - Correct answer-3
How do you establish good credit? - Correct answer-borrow $ and pay it back on
time according to its terms
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,How much is taken out of your paycheck for SS and Medicare? - Correct answer--
12.4% of earned income to SS
-2.9% of earned income to Medicare
Debt-to-credit ratio - Correct answer-how to calculate:
-$3000 debt, $6000 in credit :: 3000/6000 = 50% D/C ratio
-try to be below 50% || 30% is the best
Identity Theft: if you're a victim - Correct answer--close and replace all accounts
that have been tampered with or didn't open
-file a police report
If you are carrying a balance and you pay more than the minimum payment, where
does the excess go? - Correct answer-the excess is used to pay off debt of highest
interest rate, not the card with the smallest balance
credit hold on account - Correct answer--when a customer is consistently late in
making payments, has exceeded their credit limit, or is identified as a bad risk, you
can prevent additional credit purchases by placing their account on credit hold
-if hold is executed, it will count against credit
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Maximum interest on credit card account - Correct answer-no legal maximum
Who can see your credit scores? - Correct answer-
Website for free credit report (federally mandated for credit reports) - Correct
answer-annualcreditreport.com
Three credit scoring agencies - Correct answer-Transunion (tuc.com) -- Empirica
score
Equifax (equifax.com) -- Beacan score
Experian (experian.com) -- Experian model
Best time to establish credit - Correct answer-when you don't need it
aka younger i thinks
When are your credit payments due? - Correct answer-generally about 21-25 days
after your billing cycle ends
Secure vs unsecure line of credit - Correct answer-Debit is secure
Credit is unsecure (nothing to back it up other than credit history)
How does cancelling inactive credit cards affect your credit score? - Correct
answer--can lower because it will increase your d/c ratio
-if you cancel, cancel newest card first
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
