Question 1

If you are a woman, a creditor must

Accepted Answer

A)   require a spouse to cosign a loan.
B)   ask about your birth control practices or family plans.
C)   consider whether you have a telephone listing in your own home.
D)   refuse individual credit in your own name.
E)   consider income from your part-time employment.F) A) and D)
G) C) and D)

Question 2

Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.

Accepted Answer

A) True 
 B)False

Question 3

An installment loan 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) D) and E)

Question 4

If you have incorrect information in your credit file,

Accepted Answer

A)   you can't really do much about it.
B)   you have no legal remedies.
C)   credit bureaus are not required to change it.
D)   there are legal remedies available to you.
E)   don't worry much because you will still get the credit.F) A) and B)
G) A) and D)

Question 5

If your monthly net (after-tax)  income is $1,500, what should be your maximum amount spent on credit payments?

Accepted Answer

A)   $200
B)   $300
C)   $400
D)   $500
E)   $600F) A) and B)
G) A) and C)

Question 6

FICO scores range between

Accepted Answer

A)   1-10
B)   1-100
C)   1-1,000
D)   300-900
E)   100-500F) A) and D)
G) D) and E)

Question 7

It is legal for creditors to ask or assume anything about a woman's childbearing plans.

Accepted Answer

A) True 
 B)False

Question 8

There is always a transaction fee attached to make a cash advance.

Accepted Answer

A) True 
 B)False

Question 9

Your credit report may be issued only if this occurs with your consent.

Accepted Answer

A) True 
 B)False

Question 10

Financing from car dealers in affiliation with financial institutions is called factory financing.

Accepted Answer

A) True 
 B)False

Question 11

If there is incorrect information in your credit file,

Accepted Answer

A)   you should sue the credit bureau.
B)   you must sue the merchant who denied the credit.
C)   the credit bureau must reinvestigate and modify or remove inaccurate data.
D)   pray that the credit bureau goes bankrupt.
E)   you cannot dispute the derogatory information.F) A) and E)
G) A) and D)

Question 12

Using a credit card, such as Visa or MasterCard is an example of closed-end credit.

Accepted Answer

A) True 
 B)False

Question 13

Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.

Accepted Answer

A)   10
B)   20
C)   30
D)   40
E)   50F) C) and D)
G) A) and D)

Question 14

Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.

Accepted Answer

A) True 
 B)False

Question 15

Consumer credit is based on trust in people's ability and willingness to pay bills when due.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

In the near future, smart cards will provide a crucial link between the World Wide Web and the physical world.

Accepted Answer

A) True 
 B)False

Question 18

A car loan is an example of a consumer loan.

Accepted Answer

A) True 
 B)False

Question 19

Debt payments-to-income ratio is

Accepted Answer

A)   calculated by dividing total liabilities by net worth.
B)   calculated by dividing monthly debt payments (not including house payments)  by net monthly income.
C)   determined by dividing your assets into liabilities.
D)   a useless ratio for determining your credit capacity.
E)   rarely used by creditors in determining credit worthiness.F) D) and E)
G) None of the above

Question 20

In evaluating your credit application, a lender may

Accepted Answer

A)   ask your age.
B)   want to know if you are on public assistance.
C)   require your marriage certificate.
D)   ask if you are married or divorced.
E)   ask your race and nationality.F) B) and C)
G) C) and D)

Exam 5: Introduction to Consumer Credit

Debt payments-to-income ratio is

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Using a credit card, such as Visa or MasterCard is an example of closed-end credit.

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Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.

Correct AnswerverifiedShow Answer

In evaluating your credit application, a lender may

Correct AnswerverifiedShow Answer

If you have incorrect information in your credit file,

Correct AnswerverifiedShow Answer

Financing from car dealers in affiliation with financial institutions is called factory financing.

Correct AnswerverifiedShow Answer

Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.

Correct AnswerverifiedShow Answer

A car loan is an example of a consumer loan.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.

Correct AnswerverifiedShow Answer

In the near future, smart cards will provide a crucial link between the World Wide Web and the physical world.

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If your monthly net (after-tax) income is $1,500, what should be your maximum amount spent on credit payments?

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There is always a transaction fee attached to make a cash advance.

Correct AnswerverifiedShow Answer

Consumer credit is based on trust in people's ability and willingness to pay bills when due.

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Your credit report may be issued only if this occurs with your consent.

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If you are a woman, a creditor must

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If there is incorrect information in your credit file,

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It is legal for creditors to ask or assume anything about a woman's childbearing plans.

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An installment loan is a

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FICO scores range between

Correct AnswerverifiedShow Answer

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