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Basics Beginner: Credit

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1.
Opening several new credit accounts in a short period of time can result in an improved credit score.
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False. Opening several new credit accounts in a short period of time can result in a lowered credit score.
2.
Paying on credit is cheaper than buying outright because you make smaller monthly payments than one large payment.
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False. Paying on credit is more expensive due to the buildup of interest.
3.
An example of revolving credit is a(n) _______.
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Credit card agreement. Credit card agreements are an example of revolving credit.
4.
When getting a debt consolidation loan, you can reduce your interest rates by _______.
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Putting up collateral. Putting up collateral reduces the risk that your creditor takes on, thus qualifying you for a lower interest rate.
5.
Your credit score is determined by using _______.
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A mathematical model. This mathematical model calculates your credit risk based on several factors.
6.
Which law gives a consumer the right to have a credit report item dispute resolved within 30 days?
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Fair Credit Reporting Act. The FCRA gives consumers the right to have disputed information investigated and reported back to them within 30 days.
7.
In the language of credit, capital refers to assets that can be used as collateral.
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True. Your creditors will want to know that you have capital; it makes you look less risky.