Question 1

Which of the following is a major reason why people use credit?

Accepted Answer

A)  Weekly purchase of food 
B)  Monthly payment of utility bills 
C)  Regular payment of small cash outlays 
D)  Frequent impulse purchases 
E)  Occasionally for convenience 
A)  Weekly purchase of food 
B)  Monthly payment of utility bills 
C)  Regular payment of small cash outlays 
D)  Frequent impulse purchases 
E)  Occasionally for convenience

Question 2

You should review your credit bureau file every year.

Accepted Answer

A) True 
 B)False

Question 3

James finds it difficult to manage credit but wants the convenience of using a credit card. He wants to get a card that will provide direct access to his checking account. James should get a:

Accepted Answer

A)  retail charge card. 
B)  prepaid  card. 
C)  student credit card. 
D)  debit card. 
E)  reward card. 
A)  retail charge card. 
B)  prepaid  card. 
C)  student credit card. 
D)  debit card. 
E)  reward card.

Question 4

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. 
Nancy's take-home pay is $3,000 per month, and she currently has $700 of monthly consumer debt payments. According to credit guidelines used by experts, Nancy [ is | is not ] in a position to take on additional consumer debt.

Accepted Answer

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

Question 5

Which of the following cards provides direct access to your checking account?

Accepted Answer

A)  Retail charge cards 
B)  Affinity cards 
C)  Student credit cards 
D)  Reward cards 
E)  Bank debit cards 
A)  Retail charge cards 
B)  Affinity cards 
C)  Student credit cards 
D)  Reward cards 
E)  Bank debit cards

Question 6

Which of the following components carries the most weight in deriving a FICO score?

Accepted Answer

A)  Length of credit history 
B)  Payment history 
C)  Different types of credit uses 
D)  Amounts owed 
E)  New credit 
A)  Length of credit history 
B)  Payment history 
C)  Different types of credit uses 
D)  Amounts owed 
E)  New credit

Question 7

Justin and Angela have a home valued at $96,000 with an outstanding mortgage of $60,000. If their lender is willing to provide a home equity loan of up to 75% of the market value of the home, how much can they borrow using a home equity loan?

Accepted Answer

A)  $0 
B)  $12,000 
C)  $27,000 
D)  $28,000 
E)  $36,000 
A)  $0 
B)  $12,000 
C)  $27,000 
D)  $28,000 
E)  $36,000

Question 8

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. 
An example of open account credit would be a bank [ debit | credit ] card.

Accepted Answer

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

Question 9

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. 
The first step to take in establishing a credit history is to [ get a credit card | open checking and savings accounts ].

Accepted Answer

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

Question 10

The purpose of a credit investigation is to evaluate the kind of risk that you pose to the lender.

Accepted Answer

A) True 
 B)False

Question 11

The intent of the Wage Earner Plan is to eliminate all of a debtor's obligations.

Accepted Answer

A) True 
 B)False

Question 12

To establish credit, you should first:

Accepted Answer

A)  open checking and savings accounts . 
B)  use credit extensively. 
C)  obtain a small loan. 
D)  pay cash for all purchases. 
E)  obtain a large loan from close relatives. 
A)  open checking and savings accounts . 
B)  use credit extensively. 
C)  obtain a small loan. 
D)  pay cash for all purchases. 
E)  obtain a large loan from close relatives.

Question 13

Credit cards with very low minimum payment requirements are in the consumers' best interest.

Accepted Answer

A) True 
 B)False

Question 14

A cost-effective method of reducing debt is to use a private credit counselor.

Accepted Answer

A) True 
 B)False

Question 15

A payment made using a(n) _____ is equivalent to paying by cash.

Accepted Answer

A)  retail credit card 
B)  debit card 
C)  affinity card 
D)  reward card 
E)  student credit card 
A)  retail credit card 
B)  debit card 
C)  affinity card 
D)  reward card 
E)  student credit card

Question 16

If your monthly before-tax income is $2,000, and your monthly take-home pay is $1,500, your maximum monthly consumer credit payments should not exceed:

Accepted Answer

A)  $600. 
B)  $450. 
C)  $400. 
D)  $300. 
E)  $200. 
A)  $600. 
B)  $450. 
C)  $400. 
D)  $300. 
E)  $200.

Question 17

Chapter 7 of the U.S. Bankruptcy Code:

Accepted Answer

A)  restores all the losses incurred by the borrower. 
B)  results in the loss of all the assets of the debtor. 
C)  requires the debtor to pay back the debt in the future. 
D)  is also referred to as "straight bankruptcy." 
E)  eliminates all of the financial obligations of the borrower. 
A)  restores all the losses incurred by the borrower. 
B)  results in the loss of all the assets of the debtor. 
C)  requires the debtor to pay back the debt in the future. 
D)  is also referred to as "straight bankruptcy." 
E)  eliminates all of the financial obligations of the borrower.

Question 18

If a borrower has a high FICO score, then there is:

Accepted Answer

A)  a minimal chance of his or her loan getting approved. 
B)  no chance of his or her loan getting approved. 
C)  a high chance of having higher monthly payments for his or her loan. 
D)  a high chance of more collateral requirements for his or her loan. 
E)  a high chance that a lower interest rate will be charged for his or her loan. 
A)  a minimal chance of his or her loan getting approved. 
B)  no chance of his or her loan getting approved. 
C)  a high chance of having higher monthly payments for his or her loan. 
D)  a high chance of more collateral requirements for his or her loan. 
E)  a high chance that a lower interest rate will be charged for his or her loan.

Question 19

Paying a loan on schedule is one way to build a strong credit history.

Accepted Answer

A) True 
 B)False

Question 20

It is good to use credit for:

Accepted Answer

A)  buying groceries. 
B)  dining at a restaurant. 
C)  buying a car. 
D)  visiting a tourist destination. 
E)  paying rent for your home. 
A)  buying groceries. 
B)  dining at a restaurant. 
C)  buying a car. 
D)  visiting a tourist destination. 
E)  paying rent for your home.

Which of the following is a major reason why people use credit?

You should review your credit bureau file every year.

James finds it difficult to manage credit but wants the convenience of using a credit card. He wants to get a card that will provide direct access to his checking account. James should get a:

Which of the following cards provides direct access to your checking account?

Which of the following components carries the most weight in deriving a FICO score?

Justin and Angela have a home valued at $96,000 with an outstanding mortgage of $60,000. If their lender is willing to provide a home equity loan of up to 75% of the market value of the home, how much can they borrow using a home equity loan?

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. An example of open account credit would be a bank [ debit | credit ] card.

The purpose of a credit investigation is to evaluate the kind of risk that you pose to the lender.

The intent of the Wage Earner Plan is to eliminate all of a debtor's obligations.

To establish credit, you should first:

Credit cards with very low minimum payment requirements are in the consumers' best interest.

A cost-effective method of reducing debt is to use a private credit counselor.

A payment made using a(n) _____ is equivalent to paying by cash.

If your monthly before-tax income is $2,000, and your monthly take-home pay is $1,500, your maximum monthly consumer credit payments should not exceed:

Chapter 7 of the U.S. Bankruptcy Code:

If a borrower has a high FICO score, then there is:

Paying a loan on schedule is one way to build a strong credit history.

It is good to use credit for:

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 is a major reason why people use credit?

You should review your credit bureau file every year.

James finds it difficult to manage credit but wants the convenience of using a credit card. He wants to get a card that will provide direct access to his checking account. James should get a:

Which of the following cards provides direct access to your checking account?

Which of the following components carries the most weight in deriving a FICO score?

Justin and Angela have a home valued at $96,000 with an outstanding mortgage of $60,000. If their lender is willing to provide a home equity loan of up to 75% of the market value of the home, how much can they borrow using a home equity loan?

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. An example of open account credit would be a bank [ debit | credit ] card.

The purpose of a credit investigation is to evaluate the kind of risk that you pose to the lender.

The intent of the Wage Earner Plan is to eliminate all of a debtor's obligations.

To establish credit, you should first:

Credit cards with very low minimum payment requirements are in the consumers' best interest.

A cost-effective method of reducing debt is to use a private credit counselor.

A payment made using a(n) _____ is equivalent to paying by cash.

If your monthly before-tax income is $2,000, and your monthly take-home pay is $1,500, your maximum monthly consumer credit payments should not exceed:

Chapter 7 of the U.S. Bankruptcy Code:

If a borrower has a high FICO score, then there is:

Paying a loan on schedule is one way to build a strong credit history.

It is good to use credit for:

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