Question

What are the advantages of following a strict repayment schedule? Check all that apply.

It eliminates the need for secured credit.
It prevents additional fees from being charged.
It guarantees the borrower possible new loans.
It prevents some interest rate increases.
It shows that the borrower is responsible.

Answer 1

- It prevents additional fees from being charged. — True. On-time payments avoid late fees and penalty charges.
- It prevents some interest rate increases. — True. Timely payments help you avoid penalty APRs and reduce the chance lenders raise your rate due to missed payments.
- It shows that the borrower is responsible. — True. A consistent repayment history demonstrates creditworthiness and responsibility.

Not true:
- It eliminates the need for secured credit. — No. Some loans require collateral regardless of your payment behavior.
- It guarantees the borrower possible new loans. — No. Good repayment history improves your chances, but it does not guarantee future loan approval.