NAB Lending and Credit

Question 1

What factors make up a credit score?

Accepted Answer

Payment history, amounts owed, length of credit history, new credit, and credit mix

Answer

Only income level

Answer

Only the number of credit cards

Answer

Only the amount of debt

Question 2

What is the difference between a fixed-rate and adjustable-rate mortgage?

Accepted Answer

Fixed-rate keeps the same interest rate throughout; adjustable-rate can change based on market conditions

Answer

There is no difference

Answer

Fixed rates are always lower

Answer

Adjustable rates never change after the first year

Question 3

What is a debt-to-income ratio?

Accepted Answer

The percentage of gross monthly income that goes toward paying debts

Answer

The total amount of debt divided by total assets

Answer

A credit score calculation

Answer

The interest rate on all debts combined

Question 4

What is the purpose of a credit report?

Accepted Answer

To provide a detailed history of your credit accounts, payment behavior, and financial reliability

Answer

To show your bank account balance

Answer

To list your employment history

Answer

To calculate your tax liability

Question 5

What is collateral in lending?

Accepted Answer

An asset pledged to secure a loan that the lender can claim if the borrower defaults

Answer

The interest rate on a loan

Answer

A type of insurance

Answer

The loan application fee

Question 6

What is the difference between prequalification and preapproval for a mortgage?

Accepted Answer

Prequalification is an estimate based on self-reported data; preapproval involves verification and a conditional commitment

Answer

They are the same thing

Answer

Preapproval is less thorough

Answer

Prequalification guarantees a loan