AnswersPersonal Finance - EL3403Understanding Credit

Understanding Credit Answers

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21
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Before applying for a credit card, Jacob examines his credit report. Which explains why Jacob might examine his credit report?

A
to determine which company has the best credit card features
B
to determine if he has a history of good credit
C
to determine if he needs a credit card
D
to determine his credit limit
22
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Dahlia is explaining to her sister why a positive credit history is important. Which of the following should Dahlia give as reasons for a positive credit history? Check all that apply.

A
A good credit history portrays irresponsibility.
B
A good credit history results in lower interest rates.
C
A good credit history makes borrowing easier.
D
A good credit history results in higher interest rates.
E
A good credit history may result in denial of a rental application.
23

Pete is trying to get a loan. He has a credit score of 480. How is Pete’s lender likely to view this credit score?

A
Pete is responsible and will pay the loan back on time.
B
Pete is responsible but will not pay the loan back on time.
C
Pete is irresponsible but will pay the loan back on time.
D
Pete is irresponsible and will not pay the loan back on time.
24

Lois bought clothing at a store. She did not have enough in her bank account to pay for the purchase. After receiving the bill and paying off the balance, she realized that she paid $9.69 in interest. Which statement is true about her method of payment?

A
Lois used a debit card to make the purchase.
B
Lois used a credit card to make the purchase.
C
Lois either used a debit card or used a credit card and paid the balance in full when the bill arrived.
D
Lois either used a debit card or used a credit card and made a single payment.
25

Kendrick is planning to buy a house. Which explains why he should establish a positive credit history before buying the house?

A
He will get the house for a lower price.
B
It will be easier for him to get a loan to buy the house.
C
He will be able to get a higher interest rate when buying the house.
D
He will be able to find a house he likes more quickly.
26

Before giving a loan to a customer, a lender examines the customer’s credit report. Which explains why the lender examines the customer’s credit report?

A
to determine if the customer is a likeable person
B
to determine the customer’s income
C
to determine the customer’s job title
D
to determine if the customer is likely to pay back the loan
27

This year, Mr. Thomas has a higher credit score than he did last year. Which of the following should Mr. Thomas expect with the improved score? Check all that apply.

A
a more difficult time borrowing money to buy a house
B
an easier time getting a car loan
C
an easier time renting an apartment
D
a denial when opening a bank account
E
higher interest rates on credit cards
28

Tamera and Rupert each applied for the same credit card through the same company. Tamera has a positive credit history. Rupert has a negative credit history. Which compares their credit limits and likely interest rates?

A
Tamera’s credit limit is most likely higher than Rupert’s, and her interest rate is most likely lower.
B
Tamera’s credit limit is most likely lower than Rupert’s, and her interest rate is most likely higher.
C
Rupert’s credit limit is most likely higher than Tamera’s, and his interest rate is most likely lower.
D
Rupert’s credit limit is most likely lower than Tamera’s, and his interest rate is most likely lower.
29

Kenya used a debit card to buy a pair of jeans. Which statement is true about her method of payment?

A
Kenya used money directly from her bank account to buy the jeans.
B
Kenya borrowed the money to buy the jeans.
C
Kenya did not have enough money in her bank account to buy the jeans.
D
Kenya will pay for the jeans over time.
30

Xavier buys a computer for $525, which includes taxes. He pays for the computer over a 12-month period by paying $48.13 per month. Which statement about Xavier’s purchase is most likely true?

A
He used a debit card to make the purchase and paid exactly $525 for the computer.
B
He used a debit card to make the purchase and paid an additional $52.56 in interest.
C
He used a credit card to make the purchase and paid exactly $525 for the computer.
D
He used a credit card to make the purchase and paid an additional $52.56 in interest.
31

Yoko is buying a car from a local car dealership. She wants to get the lowest interest rate possible. Which will most likely help her get the lowest interest rate?

A
asking nicely
B
making sure she has a positive credit history
C
explaining that she has many outstanding loans
D
showing her driver’s license
32

Dahlia is explaining to her sister why a positive credit history is important. Which of the following should Dahlia give as reasons for a positive credit history? Check all that apply.

A
A good credit history portrays irresponsibility.
B
A good credit history results in lower interest rates.
C
A good credit history makes borrowing easier.
D
A good credit history results in higher interest rates.
E
A good credit history may result in denial of a rental application.

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