Free Practice Quiz Question List

05 Credit and Borrowing Online Quiz Questions

Use this free practice quiz with 20 questions to review 05 Credit and Borrowing, test your knowledge, and prepare for your next test or exam.

20 questions

Fill in the blank

1 point

The is the amount borrowed.

Choose one

1 point

Which description best distinguishes a revolving account from a loan repaid in scheduled installments?

A
A loan repaid in scheduled installments
B
A credit account that can be borrowed from and repaid repeatedly up to a limit
C
A record of a borrower's payment history
D
A number used to estimate repayment likelihood

True or false

1 point

A credit report records information such as accounts and payment history, while a credit score summarizes information from a report to help lenders estimate repayment likelihood. True or false?

A
True
B
False

Written response

1 point

What website does the material identify for requesting free credit reports?

Choose one

1 point

For a credit card that offers a grace period on purchases, which action can avoid interest on those purchases?

A
Paying only the minimum by the due date always avoids interest
B
Making a purchase during a grace period guarantees that no interest will ever be charged
C
Paying the full statement balance by its due date can avoid interest on purchases when the card offers a grace period
D
Paying the balance after the due date preserves the grace period

Fill in the blank

1 point

The expresses the yearly cost of credit as a percentage.

Choose all

1 point

Select all the factors commonly considered when calculating a credit score.

A
Whether payments were made on time
B
Balances compared with credit limits
C
The age of accounts
D
Recent credit applications
E
The mix of credit accounts
F
Whether the borrower carries a balance specifically to improve the score

True or false

1 point

The score a person sees is guaranteed to be identical to the score every lender uses. True or false?

A
True
B
False

Written response

1 point

Using the material's rough monthly approximation, about how much interest accrues in one month on an unchanged $1,000 balance at a 24% APR? Enter the amount in dollars.

Choose one

1 point

You find a balance on your credit report that you believe is incorrect. Which response matches the recommended process?

A
Dispute it only with the lender and discard all supporting records
B
Dispute it with the credit bureau and the company that supplied the information, and keep relevant records
C
Apply for a new credit card so the incorrect information is replaced
D
Wait for the information to disappear without contacting anyone

Choose all

1 point

Before taking out a loan, which steps can help you evaluate affordability and the full cost? Select all that apply.

A
Consider whether the purchase is necessary and the payment fits the budget
B
Compare offers using the same loan amount and term
C
Read the agreement for rates, fees, and what happens after a promotional period
D
Choose the offer with the lowest monthly payment without considering its term or total cost
E
Borrow up to the credit limit to avoid having unused credit

True or false

1 point

A longer repayment term can reduce a loan's monthly payment while increasing the total interest paid. True or false?

A
True
B
False

Choose one

1 point

A cardholder pays only the required minimum on time each month. Which outcome is consistent with the material?

A
It can keep the account current, but repayment can be much slower and more expensive
B
It guarantees the balance will be repaid by the next due date
C
It improves a credit score simply because a balance is carried
D
It eliminates interest charges as long as the payment is on time

Open ended

1 point

You are comparing two borrowing offers, and one has a lower monthly payment but a longer repayment term. What information should you compare before choosing, and why is the lower payment alone not enough?

Choose one

1 point

Maya can borrow from an account, repay some of what she owes, and borrow again as long as she stays within the account limit. What type of credit is this?

A
A loan repaid in scheduled installments
B
A revolving account that can be borrowed from and repaid repeatedly up to a limit
C
A credit report that lists borrowing activity
D
A credit score calculated from account information

Choose one

1 point

A borrower notices that one credit report includes a recently opened account while another does not. Which explanation is consistent with how credit reporting works?

A
Credit bureaus use identical information from every lender at the same time.
B
A credit score is the same thing as a credit report.
C
Not every lender reports to every bureau or at the same time.
D
Credit reports list only the borrower's current balances.

Choose one

1 point

A borrower finds a late payment on a credit report that they believe is incorrect. What is the most appropriate next step?

A
Dispute it with the credit bureau and the company that supplied the information, and keep copies of relevant records.
B
Contact only the lender and avoid contacting the credit bureau.
C
Apply for another credit account so the incorrect entry is replaced.
D
Ignore it unless a lender later rejects an application.

Written response

1 point

A borrower receives $8,000 and later repays more after interest and fees. What is the financial term for the original $8,000 amount borrowed?

Choose one

1 point

A credit card offers a grace period on purchases. Which action can allow a cardholder to avoid interest on those purchases?

A
Pay the full statement balance by the due date.
B
Pay only the minimum amount by the due date.
C
Keep the balance unchanged until the next statement.
D
Pay after the due date but before the next statement.

Written response

1 point

A $1,000 credit-card balance stays unchanged for one month. Using a 24% APR and approximating monthly interest as one-twelfth of the annual rate, what is the approximate interest in dollars, rounded to the nearest whole dollar?