Question 1

Janey makes frequent small purchases and pays off the total outstanding balance on her credit card every month. Which of the following features is most attractive to her when searching for a credit card provider?

Accepted Answer

A)  A low required minimum payment percentage
B)  A high interest rate
C)  High over-the-limit fees
D)  No grace period
E)  No annual feeF) D) and E)
G) A) and B)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Retail charge cards are advantageous to merchants because:

Accepted Answer

A)  they help the merchants get loans.
B)  they help build consumer loyalty.
C)  they help the merchants file for bankruptcy.
D)  they help the merchants save taxes.
E)  they help the merchants give loans to their suppliers.F) C) and D)
G) B) and E)

Question 4

The FICO credit scoring system assigns points according to:

Accepted Answer

A)  amounts owed.
B)  marital status.
C)  employment history.
D)  salary.
E)  where you live.F) A) and E)
G) C) and D)

Question 5

Credit should not be consistently used for purchasing nondurable goods.

Accepted Answer

A) True 
 B)False

Question 6

If you initiated the telephone call, it is okay to give your credit card account number when ordering or purchasing from major catalog houses, airlines, hotels, and so on.

Accepted Answer

A) True 
 B)False

Question 7

A retail charge card can be accessed by writing checks against demand deposit.

Accepted Answer

A) True 
 B)False

Question 8

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 cards.F) B) and C)
G) A) and E)

Question 9

Always paying cash helps in establishing a high level of creditworthiness.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a major reason to 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 convenienceF) None of the above
G) A) and C)

Question 11

All credit cards have annual fees.

Accepted Answer

A) True 
 B)False

Question 12

Most lenders immediately will _____ the first time that you have difficulty meeting your loan payments.

Accepted Answer

A)  double your interest rate
B)  file a legal case
C)  grant an extension
D)  erase your debt
E)  repossess the property you purchasedF) A) and B)
G) A) and C)

Question 13

Arranging for and fully repaying a small loan helps improve creditworthiness.

Accepted Answer

A) True 
 B)False

Question 14

Straight bankruptcy is allowed under _____  of the bankruptcy code.

Accepted Answer

A)  Chapter 4
B)  Chapter 7
C)  Chapter 13
D)  Chapter 19
E)  Chapter 9F) C) and E)
G) All of the above

Question 15

Overspending will help you manage your budget effectively.

Accepted Answer

A) True 
 B)False

Question 16

A credit card user's credit rating will be hampered if he or she pays only the minimum monthly payment on a credit card.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following forms of consumer credit is among the cheapest and offers limited tax deductions?

Accepted Answer

A)  Overdraft protection lines
B)  Home equity credit lines
C)  Credit cards
D)  Unsecured personal credit
E)  The Wage Earner PlanF) B) and C)
G) A) and D)

Question 18

The most common method used by lenders to apply finance charges on credit cards is the average daily balance method including new purchases.

Accepted Answer

A) True 
 B)False

Question 19

Credit scoring systems are often used by lenders to determine applicants' creditworthiness.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about credit scoring systems is true?

Accepted Answer

A)  Lower credit scores are better than higher credit scores.
B)  The credit scoring system is based on extensive statistical studies.
C)  Credit unions calculate and sell credit scores to lenders.
D)  FICO scores consider age, gender, marital status, and so on.
E)  Strength in key personal traits shows that you are a good risk for lenders and reduce your credit score.F) A) and B)
G) C) and D)

Exam 6: Using Credit

A credit card user's credit rating will be hampered if he or she pays only the minimum monthly payment on a credit card.

Correct AnswerverifiedShow Answer

Janey makes frequent small purchases and pays off the total outstanding balance on her credit card every month. Which of the following features is most attractive to her when searching for a credit card provider?

Correct AnswerverifiedShow Answer

Arranging for and fully repaying a small loan helps improve creditworthiness.

Correct AnswerverifiedShow Answer

Which of the following is a major reason to use credit?

Correct AnswerverifiedShow Answer

Always paying cash helps in establishing a high level of creditworthiness.

Correct AnswerverifiedShow Answer

The most common method used by lenders to apply finance charges on credit cards is the average daily balance method including new purchases.

Correct AnswerverifiedShow Answer

Credit scoring systems are often used by lenders to determine applicants' creditworthiness.

Correct AnswerverifiedShow Answer

Which of the following forms of consumer credit is among the cheapest and offers limited tax deductions?

Correct AnswerverifiedShow Answer

If you initiated the telephone call, it is okay to give your credit card account number when ordering or purchasing from major catalog houses, airlines, hotels, and so on.

Correct AnswerverifiedShow Answer

All credit cards have annual fees.

Correct AnswerverifiedShow Answer

Most lenders immediately will _____ the first time that you have difficulty meeting your loan payments.

Correct AnswerverifiedShow Answer

Retail charge cards are advantageous to merchants because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Straight bankruptcy is allowed under _____ of the bankruptcy code.

Correct AnswerverifiedShow Answer

Credit should not be consistently used for purchasing nondurable goods.

Correct AnswerverifiedShow Answer

Which of the following statements about credit scoring systems is true?

Correct AnswerverifiedShow Answer

The FICO credit scoring system assigns points according to:

Correct AnswerverifiedShow Answer

A retail charge card can be accessed by writing checks against demand deposit.

Correct AnswerverifiedShow Answer

Overspending will help you manage your budget effectively.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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