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Quizzes > Quizzes for Business > Finance

Take the Credit Score Knowledge Assessment Quiz

Evaluate Your Credit Rating Knowledge in Minutes

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art displaying elements related to a quiz on credit score knowledge assessment

Ready to test your financial savvy with a credit score quiz? This interactive credit score assessment helps you evaluate key factors shaping your rating and pinpoint areas for improvement. It's perfect for individuals honing their personal finance skills, educators building custom assessments, or professionals seeking deeper credit insights. Customize this Credit Score Quiz in our editor and explore companion challenges like the Credit Management Quiz. Dive into our quizzes library for more free practice tests.

Which component accounts for the largest percentage of a FICO credit score?
Payment history
Credit utilization
Length of credit history
New credit inquiries
Payment history makes up about 35% of a FICO score, making it the most heavily weighted factor. Consistently on-time payments are crucial for maintaining a strong score.
What does the term "credit utilization ratio" measure?
The percentage of available credit you are using
The total credit limit across all accounts
The number of open credit accounts
The interest rate on revolving debt
Credit utilization ratio is calculated by dividing your current balances by your total credit limits. Keeping this ratio low demonstrates responsible use of available credit.
Which type of credit inquiry can directly lower your credit score?
Hard inquiry
Soft inquiry
Account review
Promotional inquiry
A hard inquiry occurs when you apply for new credit and can reduce your score by a few points. Soft inquiries do not affect your score.
Which practice is recommended to maintain a low credit utilization rate?
Keep balances below 30% of each credit limit
Close unused credit cards
Pay only the minimum payment
Increase one balance to use available credit
Maintaining balances under 30% of each limit helps keep overall utilization low, which benefits your score. Closing cards can reduce available credit and raise utilization.
On-time payments primarily affect which aspect of your credit profile?
Payment history
Credit mix
Length of credit history
New credit inquiries
Timely payments are directly recorded in your payment history, which is the single most influential factor in credit scoring. Late payments harm this component.
How long do late payments typically remain on a credit report?
Seven years
Three years
Ten years
One year
Late payments are recorded for seven years from the date of delinquency. They can continue to impact your creditworthiness throughout that period.
Which action is most effective for improving a low credit score caused by high credit utilization?
Pay down existing credit card balances
Close older credit accounts
Request a credit limit decrease
Open multiple new credit cards
Reducing your outstanding balances lowers your utilization ratio, which can quickly improve your credit score. Closing accounts or decreasing limits can worsen utilization.
What is the typical score impact and reporting duration for a hard inquiry?
May lower score by a few points and stays on report for two years
No score change and stays for one year
Lowers score permanently and stays indefinitely
Raises score slightly and stays for six months
Hard inquiries can reduce your score by a few points and remain on your credit report for two years, though scoring models only consider them for the first 12 months.
Which of the following is an example of installment credit?
Auto loan
Credit card
Store credit account
Home equity line of credit
Installment credit involves fixed payments over a set term, such as an auto loan. Credit cards and lines of credit are revolvers with variable balances and payments.
What happens to your average account age if you close your oldest credit card?
Average age decreases
Average age increases
No change to average age
New credit age is ignored
Closing your oldest account removes its history from the calculation of average age, lowering the overall average and potentially harming your score.
Why does having a mix of credit types benefit your credit score?
It shows you can manage different forms of credit responsibly
It increases your total credit limit automatically
It removes payment history from reporting
It shortens the time inquiries remain on file
A diverse mix of installment and revolving accounts demonstrates your ability to handle various credit obligations. This diversity contributes positively to credit evaluations.
Which time window do credit scoring models typically use to group multiple rate-shopping inquiries for auto loans?
45 days
30 days
60 days
90 days
FICO scoring models group multiple auto-loan inquiries within a 45-day window as a single inquiry, reducing the score impact when shopping for the best rate.
If you carry a $1,000 balance on a $5,000 limit credit card, what is your credit utilization ratio?
20%
2%
50%
5%
Credit utilization is calculated as balance divided by limit, so $1,000 ÷ $5,000 equals 20%. Keeping utilization under 30% is generally advised.
Which strategy is most effective for rebuilding credit after a default?
Using a secured credit card responsibly
Closing older accounts
Paying only the minimum on delinquent accounts
Applying for multiple credit cards
A secured credit card requires a deposit and reports payments, helping to establish positive history after a default. Responsible use and on-time payments rebuild score over time.
What effect does regularly reviewing your credit report have on your score?
Helps identify errors but does not directly change your score
Automatically boosts your score each time
Removes hard inquiries
Increases utilization thresholds
Reviewing your report allows you to catch mistakes or fraud that could harm your score. However, checking your own report is a soft inquiry and does not affect your score.
You have two credit cards: Card A with a $10,000 limit and $2,000 balance, and Card B with a $5,000 limit and $2,000 balance. What is your overall utilization ratio?
26.7%
20%
40%
13.3%
Overall utilization is total balances ($4,000) divided by total limits ($15,000), which equals about 26.7%. Scoring models consider the aggregate ratio across all accounts.
How does opening a new credit account simultaneously affect your credit mix and average account age?
Improves credit mix but lowers average account age
Lowers mix quality and raises average age
Has no effect on either factor
Raises both mix diversity and average age
A new account adds diversity to your credit types, enhancing your credit mix. At the same time, it reduces the average age of your accounts because it's the most recent.
For FICO scoring purposes, how long do hard inquiries impact your score, and how long do they remain on the credit report?
Affect score for 12 months, remain for 24 months
Affect score for 24 months, remain for 12 months
Affect score for 6 months, remain for 18 months
Affect score indefinitely, remain for 24 months
Hard inquiries are factored into FICO scores for one year (12 months) but stay on the credit report for two years (24 months). Their impact diminishes after the first year.
Which scenario is likely to raise your credit score more quickly?
Paying down a high-limit card from $9,000 to $4,500
Closing a $10,000-limit card with zero balance
Opening a new card and carrying a balance
Requesting a limit decrease on existing cards
Reducing the balance from $9,000 to $4,500 cuts utilization in half on that card, which can significantly boost your score. Closing a zero-balance card would reduce available credit and hurt utilization.
A borrower has 50% utilization on one card and 5% on another. Which action optimally improves their score?
Pay down the high-utilization card first
Close the low-utilization card
Apply for a third credit card
Transfer all debt to the low-utilization card
Lowering the high-utilization card balance reduces an individual ratio that can weigh heavily on your score. Closing or opening accounts can have less predictable effects on utilization and age.
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Learning Outcomes

  1. Analyse factors influencing credit scores and ratings
  2. Evaluate the impact of payment history on credit health
  3. Identify strategies to improve and maintain strong credit
  4. Apply knowledge of credit utilization to optimize scores
  5. Demonstrate understanding of credit inquiry effects on ratings

Cheat Sheet

  1. Understand the Five Key Factors Affecting Credit Scores - Think of your credit score as a puzzle made of five pieces: payment history, amounts owed, length of credit history, new credit, and credit mix, each carrying a different weight. By knowing how much each piece matters, you can direct your energy where it counts most. Learn more on Investopedia
  2. Maintain a Positive Payment History - Paying your bills on time is like handing in your homework early: it shows responsibility and keeps your score shining. Automate payments or set friendly reminders to avoid late fees and keep your credit reputation spotless. Read the CFPB's guide
  3. Manage Credit Utilization Wisely - Your credit utilization ratio is the percentage of your available credit that you're using - keep it below 30% to score brownie points with lenders. Think of it as borrowing tools from a toolbox: you want to return most of them quickly so you're not seen as reckless. Check out Credit Makeover's tips
  4. Build a Lengthy Credit History - Age matters! Long-standing accounts are like veteran players on your team - they boost credibility and trust. Keep older accounts active by making small monthly charges and paying them off to showcase consistent performance. Explore ACES.edu insights
  5. Be Cautious with New Credit Applications - Opening many new accounts in a short period can alarm lenders, much like asking too many favors at once. Only apply when you really need to keep your credit profile steady and healthy. Learn more on Investopedia
  6. Diversify Your Credit Mix - A balanced credit report with cards, loans, and lines of credit shows you can handle different challenges. Think of it as assembling a well-rounded team: variety strengthens your overall game. Learn more on Investopedia
  7. Regularly Monitor Your Credit Reports - Errors on your credit report are like typos on your résumé - fix them fast to avoid losing points. You're entitled to one free report per major bureau each year, so grab them and check for any sneaky mistakes. Get your free credit reports
  8. Limit Hard Inquiries - Each hard inquiry feels like a mini pit stop on your credit journey - too many can slow you down. Keep applications to a minimum and only when you're sure you need that extra credit. Learn more on Investopedia
  9. Understand the Impact of Debt Levels - High debt relative to income can raise red flags for lenders, like carrying too much weight on a backpack. Aim to pay down outstanding balances and lighten your load for a smoother credit climb. Read more on Investopedia
  10. Stay Informed About Credit Score Changes - Credit scoring models evolve like video game updates - new rules, new strategies. Keep up with industry news to adapt your tactics and stay ahead of the curve. Read the latest on AP News
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