Question

which of the following is an advantage of maintaining a good credit score? * 2 points

a. credit card companies offer more points in their rewards system

b. greater chance of receiving a loan with a low interest rate

c. receive higher interest rates on money in a savings account

d. stocks can be purchased at a lower price

which of the following practices could negatively affect one’s credit score? * 2 points

a. reaching the spending limit on one’s credit account

b. paying bills on time

c. monitoring one’s credit report

d. protecting against fraud and identity theft

Explanation:

First Question (Advantage of good credit score)

To determine the advantage of a good credit score, we analyze each option:

• Option a: Credit card rewards points are not directly tied to credit scores (they relate to spending).
• Option b: Lenders view good credit scores as lower risk, so they offer lower interest rates for loans. This is a key advantage of a good credit score.
• Option c: Savings account interest rates are set by banks and not related to credit scores.
• Option d: Stock prices are market - driven and not related to credit scores.

To find the practice that negatively affects credit scores, we analyze each option:

• Option a: Reaching the spending limit (high credit utilization) is a factor that can lower credit scores as it shows potential over - reliance on credit.
• Option b: Paying bills on time is a positive behavior that helps improve credit scores.
• Option c: Monitoring one's credit report is a responsible practice and does not harm the credit score.
• Option d: Protecting against fraud and identity theft helps safeguard credit and does not negatively affect the credit score.

Answer:

b. Greater chance of receiving a loan with a low interest rate

Second Question (Practice negatively affecting credit score)