ππ° CUET UG 2025 English: 25 Important MCQs on Credit Score & Financial Literacy | Score 250/250
Why Students Must Start Establishing Good Credit Scores
A credit score plays a vital role in determining an individual’s financial credibility. It serves as a numerical representation of one’s ability to manage borrowed money responsibly. In today’s world, where financial transactions are increasingly digitized, students must start building a good credit score early. This can open doors to better financial opportunities, such as education loans, housing loans, and even business funding.
What is a Credit Score?
A credit score is a three-digit number, typically ranging from 300 to 850, which represents an individual’s creditworthiness. It is calculated based on an individualβs financial activities, such as loan repayment history, outstanding debts, and credit card usage. Credit bureaus collect and maintain financial records to generate this score. In India, credit bureaus such as CIBIL, Equifax, and Experian, operate under the regulations of the Reserve Bank of India (RBI).
A high credit score (above 750) indicates responsible financial behavior, making it easier for individuals to secure loans at favorable interest rates. On the other hand, a low score (below 600) suggests poor financial management, making it difficult to obtain credit. Those with little or no credit history fall under the “new to credit” category. Students often belong to this category and need to establish a credit history to access financial services in the future.
How Can Students Build a Strong Credit Score?
To develop a good credit score, students can follow these essential steps:
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Timely Repayment of Loans and Credit Cards
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Paying credit card bills and loan EMIs on time is the most crucial factor in maintaining a strong credit score.
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Setting up automatic payments or reminders can prevent missed payments and ensure financial discipline.
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Credit Utilization Ratio
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Students who use credit cards should keep their credit utilization below 30% of the available limit.
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Excessive use of credit can indicate financial instability and lower the credit score.
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Length of Credit History
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The longer an individual holds a credit account, the better it reflects financial responsibility.
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Students should start building their credit history early to establish a strong financial profile.
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Maintaining a Mix of Credit Types
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A combination of secured (home or auto loans) and unsecured credit (credit cards or personal loans) demonstrates a well-balanced credit profile.
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Avoiding Multiple Loan Applications
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Submitting multiple credit card or loan applications within a short period leads to “hard inquiries” on a credit report, temporarily lowering the score.
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Students should apply for credit wisely to avoid unnecessary inquiries.
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Why Credit Score Matters for Students?
For students, building a credit score early in life provides several advantages:
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Easier Access to Education Loans
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Many students require education loans to pursue higher studies. A good credit score improves the chances of securing loans at lower interest rates.
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Better Financial Opportunities
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A strong credit score helps students qualify for better loan offers, housing options, and even business funding in the future.
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Improved Credit Card Benefits
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Responsible credit behavior can lead to higher credit limits and better reward programs such as cashback, discounts, and travel points.
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Emergency Financial Support
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Having a strong credit score ensures quick access to credit during financial emergencies.
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Financial Discipline & Independence
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Managing a credit score teaches students budgeting, debt management, and responsible spending habits, which are essential life skills.
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How Education Loans Help Students Build Credit Scores?
Education loans allow students to start their credit journey early. Financial institutions assess a studentβs academic background and career prospects before approving the loan. Some non-banking financial companies offer repayment options such as Simple Interest and Partial Interest, which require students to start repaying interest while studying. This helps students develop financial responsibility from the beginning of their academic journey.
Building a good credit score is not just a short-term financial goal but a long-term investment in future financial stability. Students who start managing their credit scores early will have a competitive edge when applying for loans, housing, and even job opportunities. Establishing a solid financial reputation will ensure a smooth transition into adulthood with financial confidence.
25 MCQs on Credit Score & Financial Literacy (CUET English Practice)
Vocabulary & Synonyms/Antonyms MCQs
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What does “creditworthiness” mean?
a) Financial irresponsibility
b) Ability to borrow money responsibly
c) Avoiding financial transactions
d) Spending money recklessly
Answer: b) Ability to borrow money responsibly -
Choose the correct synonym for “discipline” in financial context.
a) Disorder
b) Regulation
c) Neglect
d) Confusion
Answer: b) Regulation -
What is the antonym of “prudent”?
a) Wise
b) Careless
c) Cautious
d) Responsible
Answer: b) Careless
Reading Comprehension MCQs
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What is the purpose of a credit score?
a) To measure an individualβs height
b) To determine an individualβs creditworthiness
c) To track an individual’s savings account
d) To calculate the tax amount
Answer: b) To determine an individualβs creditworthiness -
How can students improve their credit scores?
a) By not using credit cards
b) By repaying loans on time
c) By taking multiple loans
d) By ignoring bank statements
Answer: b) By repaying loans on time
Grammar: Voice & Narration MCQs
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Convert into passive voice: “Students should repay their loans on time.”
a) Their loans should be repaid by students on time.
b) On time, students should repay their loans.
c) The loans should be repaying students.
d) Loans were repaid by students.
Answer: a) Their loans should be repaid by students on time. -
Change into indirect speech: “The banker said, ‘Pay your EMI regularly.'”
a) The banker advised to pay EMI regularly.
b) The banker advised them to pay EMI regularly.
c) The banker said that EMI was paid.
d) The banker asked them to ignore EMI.
Answer: b) The banker advised them to pay EMI regularly.
Sentence Correction MCQs
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Identify the correct sentence:
a) A strong credit score gives a good financial opportunity.
b) A strong credit score give a good financial opportunity.
c) A strong credit scores gives a good financial opportunity.
d) A strong credit score gave a good financial opportunity.
Answer: a) A strong credit score gives a good financial opportunity.
Idioms & Phrases MCQs
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What does the idiom “in the long run” mean?
a) Over a short period
b) Over an extended period
c) Immediately
d) Never
Answer: b) Over an extended period
Adverbs & Adjectives MCQs
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Choose the correct adverb in the sentence: “He managed his finances wisely.”
a) Managed
b) Wisely
c) Finances
d) His
Answer: b) Wisely
Sentence Completion MCQs
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A credit score is important because it helps lenders determine _______.
a) The number of credit cards a person owns
b) A personβs ability to repay borrowed money
c) The amount of cash in a savings account
d) A person’s job eligibility
Answer: b) A personβs ability to repay borrowed money -
Students can build a strong credit score by _______.
a) Paying bills on time
b) Borrowing money excessively
c) Avoiding all credit transactions
d) Ignoring their credit card statements
Answer: a) Paying bills on time
Phrasal Verbs MCQs
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Which phrasal verb means “to be responsible for paying a debt”?
a) Pay off
b) Run out of
c) Set aside
d) Turn up
Answer: a) Pay off -
Choose the correct meaning of the phrasal verb “run up” in the sentence: “He ran up a huge debt by using multiple credit cards.”
a) Increased quickly
b) Paid off quickly
c) Ignored completely
d) Saved a lot of money
Answer: a) Increased quickly
Rearrangement of Sentences MCQs
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Arrange the following sentences logically:
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A high credit score increases your chances of getting a loan.
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A credit score represents a personβs financial history.
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Missing loan repayments can lower your credit score.
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It is important to pay bills on time to maintain a good score.
a) 2 – 3 – 4 – 1
b) 2 – 1 – 4 – 3
c) 2 – 4 – 3 – 1
d) 4 – 2 – 1 – 3
Answer: c) 2 – 4 – 3 – 1
Conditional Sentences MCQs
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Choose the correct conditional sentence:
a) If you pay your EMIs on time, your credit score will improve.
b) If you paid your EMIs on time, your credit score improves.
c) If you will pay your EMIs on time, your credit score improves.
d) If you pay your EMIs on time, your credit score would improve.
Answer: a) If you pay your EMIs on time, your credit score will improve.
Pronouns & Prepositions MCQs
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Choose the correct pronoun in the sentence: “If a student wants a good credit score, ___ must manage finances responsibly.”
a) He
b) She
c) They
d) It
Answer: c) They -
Choose the correct preposition: “She took a loan ____ an interest rate of 8%.”
a) On
b) In
c) At
d) With
Answer: c) At
Error Detection MCQs
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Identify the incorrect part of the sentence:
Many students applies for education loans, but only those with a good financial background are approved.
a) Many students
b) Applies for
c) But only those
d) Are approved
Answer: b) Applies for (Correct: “apply for”)
Active & Passive Voice MCQs
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Choose the correct passive form of: “Banks give loans to students with a good credit score.”
a) Students are given loans by banks with a good credit score.
b) Loans give banks to students with a good credit score.
c) Banks given loans are to students with a good credit score.
d) Students gave loans by banks with a good credit score.
Answer: a) Students are given loans by banks with a good credit score.
Figures of Speech MCQs
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Which figure of speech is used in the sentence: “Building a credit score is like planting a tree that grows over time”?
a) Metaphor
b) Simile
c) Hyperbole
d) Personification
Answer: b) Simile -
Identify the figure of speech: “His credit score dropped like a stone.”
a) Metaphor
b) Hyperbole
c) Simile
d) Alliteration
Answer: c) Simile
Fill in the Blanks MCQs
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A good credit score can help students secure ________ loans with lower interest rates.
a) Better
b) Faster
c) Expensive
d) Delayed
Answer: a) Better -
Credit card users should _______ their spending to maintain a good credit score.
a) Increase
b) Control
c) Ignore
d) Expand
Answer: b) Control -
The best way to maintain a strong credit score is to make _______ payments on loans and credit cards.
a) Delayed
b) Minimum
c) Timely
d) Irregular
Answer: c) Timely
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