Page

The Basics of Building Credit Answer Guide

The answers below correspond to the exercises in The Basics of Building Credit. The correct ones are bolded for convenience, with detailed explanations where applicable. For a list of answers without explanations, see the Quick Reference Answer Guide in the back.

Annotated Answer Guide

Exercise 1: What is Credit

  • 1. What does credit measure?
    1. How likely someone is to pay back a loan
    2. How well someone has made payments in the past
    3. How trustworthy someone is with money
    4. Answer: All of the above
  • 2. When do you need credit?
    1. When you apply for a loan
    2. When you apply for a credit card
    3. When you apply for a house
    4. Answer: All of the above
  • 3. What does bad credit say about you?
    1. Answer: That you are hard to trust with a loan or credit card
    2. That you do not make much money
    3. That you are young
    4. That you watch a lot of bad movies
  • 4. What does good credit say about you?
    1. That you make a lot of money
    2. That you have many credit cards
    3. Answer: That you are easy to trust with a loan or credit card
    4. That you have a lot of Facebook friends

1