How Credit Works Answers

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1
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Unsecured lines of credit

A
do not require borrowers to have collateral.
B
require borrowers to have collateral.
C
require lenders to have collateral.
D
are only available through payday loans.
2
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If a borrower cannot pay back a home mortgage, the lender will

A
require borrowers to save up money and pay cash.
B
not require the borrower to have collateral.
C
take the home as payment.
D
increase the amount of the loan.
3

Which statements describe credit cards? Choose four correct answers.They require monthly minimum payments.They use revolving lines of credit.They can be used to buy homes.They may be helpful for emergencies.They do not require borrowers to make payments.They can be used to build credit if used responsibly.

A
They require monthly minimum payments.
B
They use revolving lines of credit.
C
They can be used to buy homes.
D
They may be helpful for emergencies.
E
They do not require borrowers to make payments.
F
They can be used to build credit if used responsibly.
4

What affects how much a borrower must pay on a loan each month? Choose three correct answers.the amount of collateral the lender hasthe amount of money borrowedthe length of time given to repaythe value of the lender’s assetsthe interest rate of the loanthe number of loans the lender has made

A
the amount of collateral the lender has
B
the amount of money borrowed
C
the length of time given to repay
D
the value of the lender’s assets
E
the interest rate of the loan
F
the number of loans the lender has made
5

Compound interest is interest paid on the loan amountminus the length of the loan.minus any interest that has accumulated.plus any interest that has accumulated.plus the length of the loan.

A
minus the length of the loan.
B
minus any interest that has accumulated.
C
plus any interest that has accumulated.
D
plus the length of the loan.
7

How can borrowers use credit wisely? Choose three correct answers.by applying for additional creditby creating a budgetby identifying their wants and needsby increasing their credit card useby making minimum credit card paymentsby saving money and paying cash

A
by applying for additional credit
B
by creating a budget
C
by identifying their wants and needs
D
by increasing their credit card use
E
by making minimum credit card payments
F
by saving money and paying cash
8

Carrying debt requires making monthly payments, which canmake it easier to balance a budget.increase the money available to spend on other things.reduce stress about financial planning.decrease the money available to spend on other things.

A
make it easier to balance a budget.
B
increase the money available to spend on other things.
C
reduce stress about financial planning.
D
decrease the money available to spend on other things.

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How Credit Works Answers — TX-Personal Financial…