Question 1

You should sign your new credit cards as soon as they arrive.

Accepted Answer

A) True 
 B)False

Question 2

A valuable asset pledged to assure loan payments and subject to seizure upon default is called:

Accepted Answer

A)  capacity.
B)  character.
C)  capital.
D)  collateral.
E)  conditions.F) All of the above
G) A) and E)

Question 3

An unauthorized person who obtains a credit report under false pretenses may be:

Accepted Answer

A)  sued by the lender.
B)  sued by the borrower.
C)  jailed for 5 years.
D)  subject to a fine and imprisonment.
E)  placed on a probation.F) A) and E)
G) C) and E)

Question 4

The maximum amount of credit you are allowed by a creditor is called

Accepted Answer

A)  revolving credit.
B)  line of credit.
C)  convenience credit.
D)  installment cash credit.
E)  single lump-sum credit.F) A) and B)
G) D) and E)

Question 5

Jennifer Rogers needs a loan to purchase a new car.She knows the creditor must:

Accepted Answer

A)  ask about how many children she plans on having
B)  consider whether she has a telephone in her own name
C)  evaluate her on the same basis as applicants who are male
D)  require her husband to cosign the loan
E)  ask about her birth control methodsF) B) and C)
G) A) and E)

Question 6

The best way to maintain your credit rating is to:

Accepted Answer

A)  use credit sparingly.
B)  pay cash for your purchases.
C)  repay your debts on time.
D)  declare a Chapter 7 bankruptcy.
E)  use as many credit cards as you can.F) All of the above
G) A) and D)

Question 7

Samantha Prescott knows that credit companies must evaluate her on the same basis as a borrower who is male.Which consumer protection law guarantees her this right?

Accepted Answer

A)  Fair Credit Reporting Act
B)  Fair Credit Billing Act
C)  Equal Credit Opportunity Act
D)  Fair Debt Collection Practices Act
E)  Truth in Lending ActF) C) and E)
G) B) and C)

Question 8

Although credit allows more immediate satisfaction of needs and desires,it does not increase total purchasing power.

Accepted Answer

A) True 
 B)False

Question 9

The larger the debt-to-equity ratio,the riskier the situation is for lenders and borrowers.

Accepted Answer

A) True 
 B)False

Question 10

Installment sales credit is a:

Accepted Answer

A)  direct loan of money for personal purposes.
B)  direct loan of money for home improvement.
C)  loan that allows you to receive merchandise such as a refrigerator or furniture.
D)  direct loan for vacation purposes.
E)  synonym for a single lump-sum credit.F) C) and E)
G) A) and E)

Question 11

Amy Farmer is getting a loan to buy a used car.The bank wants to know the trade-in value of the car she is purchasing.Which of the 5 Cs of credit is the bank examining?

Accepted Answer

A)  character
B)  capacity
C)  capital
D)  collateral
E)  conditionsF) A) and B)
G) A) and E)

Question 12

Which one of the following agencies can produce for a subscribing member,almost instantaneously,a report about your past and present credit activity?

Accepted Answer

A)  federal reserve bank in your district
B)  consumer sentinel network
C)  federal trade commission
D)  public assistance office
E)  credit bureauF) B) and E)
G) A) and C)

Question 13

Stored value (or gift) cards:

Accepted Answer

A)  look nothing like typical debit cards
B)  have decreased in popularity since the mid-1990s
C)  work the same as a credit card
D)  may be eroded by fees and eventually expire
E)  are currently being used for very limited purposesF) All of the above
G) C) and D)

Question 14

Credit bureaus obtain their data from banks,finance companies,merchants,credit card companies,other creditors,and court records.

Accepted Answer

A) True 
 B)False

Question 15

What can you do if your identity is stolen?

Accepted Answer

The answer of What can you do if your identity...

Question 16

Most of the information in your credit file may be reported for only seven years.If you have declared personal bankruptcy,that fact may be reported for 10 years.

Accepted Answer

A) True 
 B)False

Question 17

A friend comes to you for advice about improving their credit score.What advice would you give them? Make sure to include the five steps for improving your credit score.

Accepted Answer

The answer of A friend comes to you for advice...

Question 18

If you are denied credit,your first step should be to:

Accepted Answer

A)  increase your income and decrease your spending.
B)  reapply for credit.
C)  hire an attorney and file a suit against the creditor.
D)  check your credit file at the consumer bureau.
E)  sue the credit bureau that provided the negative information.F) All of the above
G) B) and C)

Question 19

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Accepted Answer

A) True 
 B)False

Question 20

The debt payments-to-income ratio is calculated by dividing your total liabilities by your net worth.

Accepted Answer

A) True 
 B)False

Exam 6: Introduction to Consumer Credit

Credit bureaus obtain their data from banks,finance companies,merchants,credit card companies,other creditors,and court records.

Correct AnswerverifiedShow Answer

A friend comes to you for advice about improving their credit score.What advice would you give them? Make sure to include the five steps for improving your credit score.

Correct AnswerverifiedShow Answer

A valuable asset pledged to assure loan payments and subject to seizure upon default is called:

Correct AnswerverifiedShow Answer

The debt payments-to-income ratio is calculated by dividing your total liabilities by your net worth.

Correct AnswerverifiedShow Answer

The larger the debt-to-equity ratio,the riskier the situation is for lenders and borrowers.

Correct AnswerverifiedShow Answer

If you are denied credit,your first step should be to:

Correct AnswerverifiedShow Answer

Most of the information in your credit file may be reported for only seven years.If you have declared personal bankruptcy,that fact may be reported for 10 years.

Correct AnswerverifiedShow Answer

You should sign your new credit cards as soon as they arrive.

Correct AnswerverifiedShow Answer

Samantha Prescott knows that credit companies must evaluate her on the same basis as a borrower who is male.Which consumer protection law guarantees her this right?

Correct AnswerverifiedShow Answer

The maximum amount of credit you are allowed by a creditor is called

Correct AnswerverifiedShow Answer

Although credit allows more immediate satisfaction of needs and desires,it does not increase total purchasing power.

Correct AnswerverifiedShow Answer

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Correct AnswerverifiedShow Answer

What can you do if your identity is stolen?

Correct AnswerverifiedShow Answer

Stored value (or gift) cards:

Correct AnswerverifiedShow Answer

The best way to maintain your credit rating is to:

Correct AnswerverifiedShow Answer

Installment sales credit is a:

Correct AnswerverifiedShow Answer

Amy Farmer is getting a loan to buy a used car.The bank wants to know the trade-in value of the car she is purchasing.Which of the 5 Cs of credit is the bank examining?

Correct AnswerverifiedShow Answer

Jennifer Rogers needs a loan to purchase a new car.She knows the creditor must:

Correct AnswerverifiedShow Answer

An unauthorized person who obtains a credit report under false pretenses may be:

Correct AnswerverifiedShow Answer

Which one of the following agencies can produce for a subscribing member,almost instantaneously,a report about your past and present credit activity?

Correct AnswerverifiedShow Answer

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