W!SE Test Practice Problems
Terms in this set (33)
Which of the following is considered to be open-end credit?
A.) A mortgage
B.) A car loan
C.) Department Store Charge Cards
D.) Installment loans
What is meant by an uncollateralized loan?
A.) A loan not backed by a co-signer who agrees to cover the amount of the loan.
B.) A personal loan without assets to cover the loan amount.
C.) A home equity loan.
D.) A loan taken on a life insurance policy
When a person declares bankruptcy that fact will appear on the person's credit report?
A.) For a 3 year period
B.) For a 10 year period
C.) Until the person repays all debts owed.
D.) Until the person is able to receive a new credit card
To qualify for a Federal Housing Administration (FHA) loan, a person must generally.....
A.) have a least a high school diploma
B.) have one-quarter of the cost of the home for a down-payment
C.) fulfill income guidelines
D.) provide two individuals to co-sign the loan
When a person brings an item to a pawnshop to obtain cash, the transaction is considered a/an....
A.) collateralized loan
B.) custodial payment
C.) unsecured loan
D.) sales agreement
A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take?
A.) Notify a credit reporting agency in order to negotiate a new payment plan
B.) File for bankruptcy in order to maintain ones current credit score
C.) Notify the credit card companies in order to negotiate a new payment plan
D.) Contact the Internal Revenue Service in order to avoid paying income tax this year
Predatory lending practices do not include which of the following:
A.) A creditor knocking on your door and agreeing to refinance your mortgage without looking at your credit history
B.) An individual agreeing to a high cost loan with excessive fees
C.) A lender who expects a loan to be refinanced when you are unable to make payments
D.) A loan that you can afford with an interest rate that is the same as the interest rate being charged by at least three other financial institutions
A saving account earns the greatest amount of money when the interest on the account is compounded...
If you have been denied credit, a job, a license, an insurance policy, or a loan based on your credit report. You entitled to receive a free copy of that credit report within how many days of denial?
D.) There is no time limit
Redlining is characterized by a lender who denies a loan:
A.) based on the customer's ability to repay
B.) because of a customer's age
C.) to customers applying for a loan over a certain dollar amount
D.) to customers living in certain geographic areas
A company offers direct deposit of employees' earnings. The company will still provide each employee with a statement that lists the employee's....
A.) gross pay only
B.) net pay only
C.) gross pay and the amount and type of deductions only
D.) gross pay, the amount and type of deductions and net pay
How can you protect yourself against credit card fraud?
A.) Do not give personal information when applying for a credit card
B.) Be extremely careful about disclosing account information to unsolicited callers
C.) Avoid using your credit card in department stores
D.) Call the credit card company to put them on alert when you are concerned
Victims of predatory lending practices are typically:
A.) Consumers who are financially literate
B.) Consumers who have a good credit history
C.) The elderly and people with a poor credit history
D.) Borrowers in wealthy communities
Maxine has an auto loan that she has to pay. She will make monthly payments over five years. She has a(an):
A.) Unsecured loan
B.) Non-installment loan
C.) Balloon payment loan
D.) Installment loan
Claire go a new credit card from American Bank and wants to cancel her USA credit card. The best method is to dispose of her USA credit card is to:
A.) Put in the garbage; the credit company will know she's closing the account when she doesn't use her card.
B.) Cut up the card and put parts in different garbage bags
C.) Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or phone to close the account.
D.) It doesn't matter how she disposes of the credit card if she instructs the credit card company to close the account.
When you mail your credit card payment on the due date, your payment will be considered:
A.) Late, and the company will assess you a late fee
B.) On time as long as the postmark is on or before the due date
C.) Late, but the company will not assess a fee
D.) On time, because you paid within the day grace period
Ms. Jackson contacted a mortgage company about refinancing her mortgage. The mortgage company gave her a home loan with unusually high costs and without regard to her ability to repay. This practive is called:
B.) Low-income lending
C.) Predatory lending
D.) Consumer lending
You can continue to charge purchases on your credit card when:
A.) The amount you owe on this credit card is above your credit limit.
B.) Your payments are always received by the due date.
C.) The amount you owe on the card is below your credit limit
D.) You can afford the monthly repayments
Which of the following lenders charge the highest interest rate?
B.) Credit Union
C.) Pawn shop
One example of a long-term retirement goal is to...
A.) end the use of credit cards
B.) close savings accounts
C.) deposit at least $100,000 in a retirement account
D.) invest in high risk securities
Judi and Phil had a joint VISA credit card while they were married. They are now divorced. Who is responsible for the balanced owe the VISA card?
A.) Both Judi and Phil
B.) Phil since he is has a full time job
C.) Neither Phil nor Judi because they are now divorced
D.) The credit card company
A credit card finance charge is:
A.) The sales tax
B.) The cost of the items purchased
C.) The dollar amount it costs to use credit
D.) A service fee
Josh is shopping for a car loan. A friend told him to compare the actual cost of the loan for one year expressed as a percentage from three banks. He needs to ask for the:
A.) Finance charge percentage
B.) Annual percentage rate (APR)
C.) Credit insurance percentage
D.) Finance percentage
Dawn graduated from high school and wants to get a credit card. How can Dawn establish credit-worthiness?
A.) Getting a charge account with a low credit limit and paying the bills when possible.
B.) Opening a checking account, making regular deposits, and avoiding penalties for insufficient funds.
C.) Getting a small loan with a cosigner and have the co-signer repay.
D.) Borrowing money from friends and relatives.
Consumers who file for bankruptcy are still responsible for:
A.) Mortgage loans
B.) Credit card balances
C.) Tax claims and student loans
D.) Car loans
Which factor would most likely lead to an increase rate on a person's credit card?
A.) Number of purchases
B.) Late payments
C.) Total amount charged
D.) Number of cash advances
Stephanie has several open department store credit charge cards that she has not used in 2 years. There are no credit balances on any of the accounts. The effect these charge cards may have on her application for a loan or mortgage is:
A.) They are open accounts that she could use, will be considered in any application for credit, and could make it difficult for her to get a loan or mortgage.
B.) They are sometimes closed by the department store so it they have no effect on her credit report.
C.) They are open accounts but they will not adversely affect her credit report because she has not used them for so long.
D.) They are department store credits cards that are not included on a credit report.
Jane opened her credit card bill and was surprised by the amount she owed. She cannot pay the full amount of the bill this month. The lowest dollar amount Jane is required to pay by the credit card company is the:
A.) Monthly fee payment
B.) Principal payment
C.) Minimum payment
D.) Interest payment
What is a Credit score?
A.) A number used to determine how much credit to extend to a person.
B.) A measure used to indicate a person's gross wealth
C.) A reward system that is based on the number of credit cards a person has.
D.) A formula based solely on a person's earnings.
Consumer Credit Counseling Services (CCCS) offer:
A.) Retirement plans
B.) Debt repayment plans
C.) Stocks and bonds
D.) Insurance policies
Redlining is characterized by a lender who denies a loan:
A.) Based on the customer's ability to repay
B.) Because of a customer's age
C.) To customers applying for a loan over a certain dollar amount
D.) To customers living in certain geographic areas
When a borrower fails to repay a loan and there is a co-signer on the loan, the most likely result will be..
A.) The co-signer will be held responsible for the repayment of the entire loan plus fees or penalties
B.) Only the co-signer's credit report will show that there has been a default on the loan.
C.) The co-signer will be held responsible for one-half the repayment of the loan.
D.) The co-signer has the opportunity to renegotiate the loan.
To improve an UNFAVORABLE credit rating, a person should...
A.) pay bills on time
B.) apply for more credit
C.) increase the number of payroll deductions
D.) open a checking account