Question 1

Which of the following does a lender look at before granting credit to an applicant?

Accepted Answer

A)  The applicant's political interests 
B)  The applicant's circle of friends 
C)  The applicant's age 
D)  The applicant's religious affiliations 
E)  The applicant's career goals 
A)  The applicant's political interests 
B)  The applicant's circle of friends 
C)  The applicant's age 
D)  The applicant's religious affiliations 
E)  The applicant's career goals

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
In the year after the Credit Card Act of 2009 was passed, there was a(n) [ increase | decrease ] in the use of debit cards relative to credit cards.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 3

An individual can be overusing credit even if he or she can afford to make the minimum monthly payments on time.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements about the cash advances that the holder of a bank credit card can obtain from participating banks is true?

Accepted Answer

A)  Cash advances are loans on which interest begins to accrue only when the borrower uses them to make purchases. 
B)  Cash advances without any limits can be withdrawn from an automated teller machine (ATM) using credit cards. 
C)  Cash advances obtained from the teller window at a bank are limited by the unused credit in the borrower's account. 
D)  Cash advances can be obtained only during the hours the bank is open. 
E)  Cash advances are loans obtained from an automated teller machine (ATM) using credit cards that do not allow merchandise purchases. 
A)  Cash advances are loans on which interest begins to accrue only when the borrower uses them to make purchases. 
B)  Cash advances without any limits can be withdrawn from an automated teller machine (ATM) using credit cards. 
C)  Cash advances obtained from the teller window at a bank are limited by the unused credit in the borrower's account. 
D)  Cash advances can be obtained only during the hours the bank is open. 
E)  Cash advances are loans obtained from an automated teller machine (ATM) using credit cards that do not allow merchandise purchases.

Question 5

If the information in an individual borrower's credit report contains an error, he or she is entitled to:

Accepted Answer

A)  request a correction. 
B)  sue the credit bureau. 
C)  erase the credit report. 
D)  refuse to provide credit information. 
E)  withdraw from the credit bureau. 
A)  request a correction. 
B)  sue the credit bureau. 
C)  erase the credit report. 
D)  refuse to provide credit information. 
E)  withdraw from the credit bureau.

Question 6

As a percent of take-home pay, monthly consumer credit payments should not exceed:

Accepted Answer

A)  25%. 
B)  20%. 
C)  15%. 
D)  10%. 
E)  5%. 
A)  25%. 
B)  20%. 
C)  15%. 
D)  10%. 
E)  5%.

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A person who files for bankruptcy using the Wage Earner Plan [ keeps | does not keep ] title to all of his or her assets throughout the process.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 8

When canceling a credit card, you should cut up the card and _____ that you are canceling your account.

Accepted Answer

A)  inform the issuer in writing 
B)  call to inform the issuer 
C)  inform the credit bureau in writing 
D)  call to inform the credit bureau 
E)  inform the future lender in writing 
A)  inform the issuer in writing 
B)  call to inform the issuer 
C)  inform the credit bureau in writing 
D)  call to inform the credit bureau 
E)  inform the future lender in writing

Question 9

Obtaining a small loan, even if you don't need one, and then repaying it promptly is a good way to establish credit.

Accepted Answer

A) True 
 B)False

Question 10

The decision about whether or not to grant you credit will be made by:

Accepted Answer

A)  individual creditors. 
B)  local credit bureaus. 
C)  the credit cardholder. 
D)  the Federal Trade Commission (FT
C) . 
E)  national credit bureaus. 
A)  individual creditors. 
B)  local credit bureaus. 
C)  the credit cardholder. 
D)  the Federal Trade Commission (FT
C) . 
E)  national credit bureaus.

Question 11

Retail charge cards are cheaper than credit cards provided by financial institutions.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is the best way to build a strong credit history?

Accepted Answer

A)  Use a debit card on a regular basis 
B)  Regularly use credit cards to buy on impulse 
C)  Consistently make payments on time 
D)  Use one form of credit to make payments on other debt 
E)  Obtain a loan and pay it off in as few payments as possible 
A)  Use a debit card on a regular basis 
B)  Regularly use credit cards to buy on impulse 
C)  Consistently make payments on time 
D)  Use one form of credit to make payments on other debt 
E)  Obtain a loan and pay it off in as few payments as possible

Question 13

The average filer of personal bankruptcy has low income, is between 25 and 34 years old, and has no college-level education.

Accepted Answer

A) True 
 B)False

Question 14

The key to creditworthiness is to maintain your debt safety ratio at 50% or above.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an improper use of credit?

Accepted Answer

A)  Buying a home 
B)  Buying a short-lived good 
C)  Spreading payments within a budget 
D)  Purchasing a big-ticket item 
E)  Meeting a financial emergency 
A)  Buying a home 
B)  Buying a short-lived good 
C)  Spreading payments within a budget 
D)  Purchasing a big-ticket item 
E)  Meeting a financial emergency

Question 16

A person who pays off his credit balance every month should look for a credit card with a:

Accepted Answer

A)  long grace period. 
B)  high annual fee. 
C)  high interest rate. 
D)  low interest rate on existing balance. 
E)  low introductory rate. 
A)  long grace period. 
B)  high annual fee. 
C)  high interest rate. 
D)  low interest rate on existing balance. 
E)  low introductory rate.

Question 17

If you are expecting difficulties in making your payments, it is recommended that you:

Accepted Answer

A)  talk to the creditors. 
B)  declare bankruptcy. 
C)  file a legal complaint. 
D)  obtain more credit. 
E)  transfer your debt to another creditor. 
A)  talk to the creditors. 
B)  declare bankruptcy. 
C)  file a legal complaint. 
D)  obtain more credit. 
E)  transfer your debt to another creditor.

Question 18

Sheldon has a home valued at $108,000 with an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of the market value of his home, how much can Sheldon borrow using a home equity loan?

Accepted Answer

A)  $86,400 
B)  $80,000 
C)  $38,000 
D)  $30,400 
E)  $16,400 
A)  $86,400 
B)  $80,000 
C)  $38,000 
D)  $30,400 
E)  $16,400

Question 19

The most expensive method for determining finance charges on revolving credit would be the:

Accepted Answer

A)  average daily balance (AD
B)  method, including new purchases. 
B)  average daily balance (AD
B)  method, excluding new purchases. 
C)  annual percentage rate (APR) method, including new purchases. 
D)  annual percentage rate (APR) method, excluding new purchases. 
E)  annual percentage rate (APR) method, excluding new purchases for student credit cards. 
A)  average daily balance (AD
B)  method, including new purchases. 
B)  average daily balance (AD
B)  method, excluding new purchases. 
C)  annual percentage rate (APR) method, including new purchases. 
D)  annual percentage rate (APR) method, excluding new purchases. 
E)  annual percentage rate (APR) method, excluding new purchases for student credit cards.

Question 20

_____  involves some type of debt restructuring by establishing a debt repayment schedule.

Accepted Answer

A)  The Wage Earner Plan 
B)  Straight bankruptcy 
C)  Pretexting 
D)  Phishing 
E)  Skimming 
A)  The Wage Earner Plan 
B)  Straight bankruptcy 
C)  Pretexting 
D)  Phishing 
E)  Skimming

Which of the following does a lender look at before granting credit to an applicant?

An individual can be overusing credit even if he or she can afford to make the minimum monthly payments on time.

Which of the following statements about the cash advances that the holder of a bank credit card can obtain from participating banks is true?

If the information in an individual borrower's credit report contains an error, he or she is entitled to:

As a percent of take-home pay, monthly consumer credit payments should not exceed:

When canceling a credit card, you should cut up the card and _____ that you are canceling your account.

Obtaining a small loan, even if you don't need one, and then repaying it promptly is a good way to establish credit.

The decision about whether or not to grant you credit will be made by:

Retail charge cards are cheaper than credit cards provided by financial institutions.

Which of the following is the best way to build a strong credit history?

The average filer of personal bankruptcy has low income, is between 25 and 34 years old, and has no college-level education.

The key to creditworthiness is to maintain your debt safety ratio at 50% or above.

Which of the following is an improper use of credit?

A person who pays off his credit balance every month should look for a credit card with a:

If you are expecting difficulties in making your payments, it is recommended that you:

Sheldon has a home valued at $108,000 with an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of the market value of his home, how much can Sheldon borrow using a home equity loan?

The most expensive method for determining finance charges on revolving credit would be the:

_____ involves some type of debt restructuring by establishing a debt repayment schedule.

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 6: Using Credit

Which of the following does a lender look at before granting credit to an applicant?

An individual can be overusing credit even if he or she can afford to make the minimum monthly payments on time.

Which of the following statements about the cash advances that the holder of a bank credit card can obtain from participating banks is true?

If the information in an individual borrower's credit report contains an error, he or she is entitled to:

As a percent of take-home pay, monthly consumer credit payments should not exceed:

When canceling a credit card, you should cut up the card and _____ that you are canceling your account.

Obtaining a small loan, even if you don't need one, and then repaying it promptly is a good way to establish credit.

The decision about whether or not to grant you credit will be made by:

Retail charge cards are cheaper than credit cards provided by financial institutions.

Which of the following is the best way to build a strong credit history?

The average filer of personal bankruptcy has low income, is between 25 and 34 years old, and has no college-level education.

The key to creditworthiness is to maintain your debt safety ratio at 50% or above.

Which of the following is an improper use of credit?

A person who pays off his credit balance every month should look for a credit card with a:

If you are expecting difficulties in making your payments, it is recommended that you:

Sheldon has a home valued at $108,000 with an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of the market value of his home, how much can Sheldon borrow using a home equity loan?

The most expensive method for determining finance charges on revolving credit would be the:

_____ involves some type of debt restructuring by establishing a debt repayment schedule.

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Planning for Retirement

Preserving Your Estate

Filters