WISE Credit

When a person brings an item to a pawnshop to obtain cash, the transaction is considered

• a collateralized loan
• a custodial payment.
• an unsecured loan
• a 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 avoid a late fee.
• File for bankruptcy in order to maintain ones current credit score
• Notify the credit card companies in order to negotiate a new payment plan.
• Contact the Internal Revenue Service in order to avoid paying income tax this year.

What is meant by an uncollateralized loan?

• A loan not backed by a co-signer who agrees to cover the amount of the loan.
• A personal loan without assets to cover the loan amount.
• A home equity loan.
• A loan taken on a life insurance policy.

When a person declares bankruptcy that fact will appear on the person?s credit report

• for a 3 year period
• for a 10 year period.
• until the person repays all debts owed.
• until the person is able to receive a new credit card.

Which of the following is considered to be open-end credit?

• A mortgage
• A car loan
• Department store charge cards
• Installment loans

To qualify for a Federal Housing Administration (FHA) loan, a person must generally

• have at least a high school diploma
• have one-quarter of the cost of the home for a down-payment
•  fulfill income guidelines
• provide two individuals to co-sign the loan.

Collateral is

• Something of value that secures a loan to protect the lender
• Something that explains your net worth
• A form of credit Answer 
• Required for all loans

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:

• Finance charge percentage
• Annual percentage rate (APR)
• Credit insurance percentage
• Finance percentage

Stephanie has several open department store credit charge cards that she has not used in two 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:

• 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.
• They are sometimes closed by the department store so it they have no effect on her credit report.
• They are open accounts but they will not adversely affect her credit report because she has not used them for so long.
• They are department store credit cards that are not included on a credit report. 

When Mary bought a DVD player, she charged it on her credit card. Her purchase created a(an):

• Reserve
• Debt
• Savings
• Investment