Page 1 of 1

1. Which of the following is not an advantage of consumer credit?:A car or house can be used before you own it.
Credit is usually free.
Credit allows you to purchase merchandise or services over the internet.
Credit can provide cash for emergencies.

2. Which of the following are disadvantages of credit? (choose two correct answers):Credit does not help with large purchases, such as a house.
Credit helps with conflicts with merchants.
Credit generally costs more than paying cash.
Many people lose track of their expenses.

3. A finance charge on credit (choose two correct answers):Does not include APR.
Excludes annual fees.
Includes certain fees.
Includes interest.

4. The annual percentage rate of credit (choose two correct answers):Always includes all loan fees.
Is something that lenders often use when advertising a loan rate.
Is not helpful in comparing and selecting a loan.
May include some fees charged by lenders for the use of their money.

5. Loan collateral (choose two correct answers):Is used with nearly all credit cards.
Is used to "secure" a loan.
Is not part of the "Three Cs" used to determine creditworthiness.
Is something of value a lender will acquire from you if you default on your loan.

6. Elmer is not sure he has good credit. He lists the reasons why he might have bad credit. Which of the following reasons was he right about? (choose two correct answers):He's unemployed.
He pays his bills every month.
He has several credit cards.
He has too much collateral.

7. Joshua's credit card payment is due on May 3, but he has until May 13 to get his check to the credit card company. What is the 10 days between the 3rd and the 13th called?Past-due period.
Period of last resort.
Grace period.
Late payment period.

8. Generally, the advantages of a short-term loan versus a long-term loan are (choose two correct answers): Lower interest rate.
Lower total cost of loan.
Higher total cost of loan.
Higher monthly payment.

9. Generally the advantage of a long-term loan versus a short-term loan is:Lower total cost of the loan.
Lower monthly payments.
Lower interest rate.

10. True or False: Credit card interest rates are generally higher because they do not require collateral.True
False

11. Why do some lenders charge different rates of interest for new and used car loans? After all, it's still a car.New cars are more difficult to repossess.
Used car loan rates are lower because the vehicles usually cost less.
New cars are worth more as collateral.
Used car buyers are usually at higher risk of defaulting.

12. A line-of-credit (choose two correct answers):Is a type of loan that allows the borrower to "charge" up to a maximum limit.
Must be taken in one lump sum - all at once.
Called a Home Equity Line of Credit when a house is used as collateral.
Has the highest rates of interest of any type of loan.

13. When comparing a loan from three or more lenders, it is important to (choose two correct answers):Calculate the total cost of each loan for the length of the loan.
Only consider the amount of the monthly payments.
Only consider what you need for the money for at the current time.
Consider if the interest on the loan is an allowable tax deduction.

14. Which of the following is not a fact you could legitimately question after examining your credit report?:That the creditor allowed the charges beyond your credit limit so they are responsible.
That your lack of payment was because of lack of service by the creditor.
That not all of the charges are yours or your spouse's.
That you don't use some of the alternative names listed.

15. What could cause you problems when you write to correct an error on your credit report?You don't keep receipts and old checks.
Always paying the minimum amount on time.
Paying off the card with the highest balance by using another card.

16. Which of the following might lower your credit score? (choose two correct answers):Paying your bills on time.
Correcting blatant mistakes on your credit report.
Opening a new credit card account when applying for a loan.
Moving, or rolling, credit card balances forward to another credit card.

17. Which of the following will NOT raise your credit score?:Adding to your monthly credit balance while opening new accounts.
Using only the credit cards you need and paying them off each month.
Reducing your credit card balances.
Keeping the amount you borrow under 35 percent of your credit limit.

18. True or False: Chapter 7 Bankruptcy will generally show up on your credit report for up to seven years.False
True

28. Your brother is determined to take control of his money and financial health by getting out of debt. You tell him you can help by creating a debt recovery plan, so the first thing you do is prioritize a few activities. What are they likely to be? (choose two correct answers):Keep his debt situation private and don't tell anyone.
Avoid getting another job and just sit tight with his current job.
Look for ways to cut expenses wherever possible.
Shop for a credit card that has no annual fee and the lowest interest rate.

29. What right or responsibility is included in the Fair Credit Reporting Act?Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them.
You have the right to find out information on your credit report.

30. What right or responsibility is included in the Fair Debt Collection Practices Act?You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance.
Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them.

31. What right or responsibility is included in the Equal Credit Opportunity Act?A creditor must give you written notice of the cost of credit and terms of repayment before you get a loan or credit card.
You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance.

32. What right or responsibility is included in the Truth in Lending Act?You can get a free copy of your credit report every year from the three major reporting agencies.
A creditor must give you written notice of the cost of credit and the terms of repayment before you get a loan or credit card.

33. What right or responsibility is included in the Bankruptcy Abuse Prevention and Consumer Protection Act?Changes the requirements for Chapter 7 and Chapter 13 bankruptcies.
Has made few major changes from past laws.
Was never passed by Congress and signed by the President, but is likely to pass in the future if Americans continue to increase their personal debt load.
Protects consumers by making it easier to file bankruptcy and discharge, or eliminate debts.

34. The "Consumer Protection" part of the Bankruptcy Abuse Prevention and Consumer Protection Act requires consumers who file bankruptcy to (choose two correct answers):Take counseling.
Take an approved course in personal finance.
Wait one year during a "cooling off period" before having their debts discharged or eliminated.
Talk to an IRS agent before filing so they thoroughly understand the tax implications of the new law.