Credit is a very complex financial concept. Do we need credit? How much credit it too much? Take the quiz below and find out how much you know about credit. Write down your answers on a sheet of paper and see how you score.
The percent of your take-home pay used for credit payments should not exceed
A. 5% B. 10% C. 20% D. 25%
A bank may refuse to offer you credit based on:
A. age B. income and credit history C. number of dependent children D. marital status
The best indicator of the cost of a loan is the:
A. number of monthly payments B. monthly payment amount C. interest rate D. loan amount
When shopping for credit cards, evaluate:
A. fees B. the way interest is compounded C. interest rates D. all of the above
A grace period is important because it:
A. allows you to skip one of your monthly payments
B. gives you a period of time during which to pay off your bill without incurring interest charges
C. allows you to charge over your approved line of credit for a month
D requires you to pay off your balance over a set period of time
The Equal Credit Opportunity Act state that:
A. consumers are protected from illegal discrimination based on race, color, religion, national origin, sex, marital status or age
B. a creditor cannot ask you to reapply, close your account or change terms of a loan if you become widowed or divorced
C. a creditor cannot turn you down for credit if your income comes from pensions, annuities or part-time income
D. all of the above
To keep credit card interest payments as low as possible:
A. try to pay off your bills in full every month
B. take out a bank loan at a lower interest rate and use the money to pay off your credit card bills
C. switch to a different credit card that has a lower interest rate
D. all of the above
If you carry a balance of $2,000 with a card that charges 18% interest, by making the minimum monthly payment of 3%, you will pay off the loan in:
A. three years B. six years C. nine years D. twelve years
Which purchase would be a wise use of credit if money were tight?
A. eating out B. going on a vacation C. buying clothes on sale D. buying a basic washer and dryer set
A person with credit problems should:
A. commit themselves not to increase the debt they already have
B. analyze their spending habits and adjust them
C. contact a local consumer credit counseling service
D. all of the above
Go to the next page to score your Credit IQ Quiz
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