AnswersPersonal Finance - EL3403Credit and Loans

Credit and Loans Answers

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1
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The type of credit people are most likely to use for small purchases during their lifetime is

A
a credit card.
B
a personal loan.
C
an auto loan.
D
a mortgage.
2
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For which buyer would a lender most likely approve a $200,000 mortgage?

A
a person with a credit score of 800 with a large amount of debt who has recently switched to a lower-paying job
B
a person with a credit score of 760 with a small amount of debt who has had steady employment for many years
C
a person with a credit score of 650 with a large amount of available credit who has a low-paying, but steady job
D
a person with a credit score of 600 with a small amount of available credit who has recently switched to a high-paying job
3

A way to build good credit is

A
using only secured loans.
B
taking out many lines of credit.
C
paying bills when they are due.
D
using only credit cards.
4

A credit score is based in part on

A
employment and race.
B
income and location.
C
employment and trust.
D
payment history and total debt.
5

An example of secured credit is a

A
payday loan.
B
credit card.
C
mortgage.
D
medical bill.
6

Which statement is true of both mortgages and auto loans?

A
They are riskier than student loans for lenders.
B
They do not require a minimum payment.
C
They are secured loans and generally require a down payment.
D
They have higher interest rates than credit cards.
7

What is a benefit of obtaining a personal loan?

A
getting money with special repayment terms
B
getting money with favorable interest rates
C
getting small amounts of money to use immediately
D
getting large amounts of money to use immediately
8

In determining whether to issue a loan, banks are not allowed to ask about an applicant’s

A
employment history.
B
date of birth.
C
country of origin.
D
income tax returns.
9

Consumers who pay more than the minimum payment on credit cards

A
pay less interest in the long run.
B
are able to buy more things.
C
see their credit scores decrease.
D
qualify for mortgages.
10

What best determines whether a borrower’s interest rate on an adjustable rate loan goes up or down?

A
a fixed interest rate
B
a bank's finances
C
a market's condition
D
a person's finances

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