01The single largest factor in a FICO score is:
- A. Amounts owed
- B. Payment history
- C. Length of credit history
- D. Credit mix
Reveal answer
B. Payment history is 35% of the FICO score; amounts owed is 30%.
02To maximize a FICO score, revolving utilization should be:
- A. At or near the credit limit
- B. Between 30% and 50%
- C. Under 10% at the moment the statement closes
- D. Zero, with no activity at all
Reveal answer
C. Utilization is measured at statement close. Under 10% is the target; zero activity is worse than a small statement balance paid in full.
03The grace period on a credit card applies only to:
- A. New cardholders in the first 12 months
- B. Cardholders who pay the statement balance in full each cycle
- C. Cardholders who never carry a balance from the previous cycle
- D. Cardholders with prime-tier scores
Reveal answer
B. The grace period is contingent on paying the statement balance in full. Miss one cycle and interest accrues from the transaction date until the next full payment.
04A secured credit card is best used for:
- A. Building high credit limits quickly
- B. Rebuilding a thin or damaged file
- C. Reducing interest on existing debt
- D. Bypassing the credit-inquiry system
Reveal answer
B. A secured card, funded by a refundable deposit, is the standard instrument for rebuilding credit.
05Payday loans are best characterized as:
- A. A short-term liquidity tool
- B. A credit-building product
- C. A high-cost extractive product to be avoided
- D. A regulated bank loan
Reveal answer
C. Payday loans compound at annualized rates in the hundreds of percent and trap borrowers in rollovers. Bankruptcy is often the better option.
06The FICO score used by most mortgage lenders is:
- A. The most recent VantageScore
- B. An older FICO version (typically FICO 5) at all three bureaus
- C. The bureau's own proprietary score
- D. The score published on the consumer's credit-card statement
Reveal answer
B. Mortgage lenders use older FICO versions across the three bureaus and typically use the middle score. Consumer-facing scores often overstate the mortgage-priced number.
07Closing the oldest credit card:
- A. Improves the score by reducing available credit
- B. Has no effect once the account is a year old
- C. Reduces the average age of accounts and lowers the score
- D. Is required when you no longer use the card
Reveal answer
C. The oldest tradeline anchors the length-of-history factor. Keep it open even if it is used only occasionally.
08The purchase most poorly financed on a credit card is:
- A. A restaurant meal paid in full at statement close
- B. A vacation paid in full at statement close
- C. Furniture bought on a 24-month promotional financing offer that reverts to 26% APR
- D. A subscription service
Reveal answer
C. Deferred-interest promotional offers apply the accrued interest retroactively if any balance remains at the end of the promo period. Households routinely fail to pay off in time.
A short assessment of comprehension before advancing.