Dave Ramsey Ch. 4 - Debt

Which of the following is not a factor in determining a FICO score?

• Getting a personal loan from a bank
• Using credit cards
• Paying cash for all purchases
• Taking out a mortgage on a house

Which of the following is not a good idea for getting out of debt?

• Quit borrowing money
• Get a part-time job or work overtime
• Sell something
• Borrow money from your parents to pay for the debt

Which of the following things cannot be done with a debit card but can be done with a credit card?

• Go into debt
• Rent a car
• Purchase something online
• Purchase an airline ticket

What factors affect a credit score?

• Type of debt
• New debt
• Duration of debt
• All of the above

Which of the following is the most cost-effective option for purchasing a home?

• Get a 15-year mortgage with a 5% down payment.
• Get a 30-year mortgage so that you can get the lowest possible payments.
• The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%.
• Get a 30-year mortgage with a 20% down payment.

Which of the following is not recommended in the debt snowball method of getting out of debt?

• List your debts in order from smallest to largest balance and focus on paying the smallest debt off first.
• Every extra dollar you get should be thrown at the largest debt first.
• Attack your debt with intensity.
• Every time you pay off a debt, you add its old minimum payment to your next debt payment.

Which of the following is not a credit myth?

• The lottery and other forms of gambling will you make you rich.
• You have "arrived" financially once you get approved for a credit card.
• Debt is a tool and should be used to create prosperity.
• Borrowing money can have serious consequences and prevent you from building wealth.

A credit score is intended to measure:

• Your financial success
• The risk of you not repaying debt
• Your income level
• The amount of money you have in the bank

Which of the following is a sign that your identity may have been stolen?

• A call from a collection agency about a debt you didn't incur
• Bank and billing statements don't arrive on time
• Your credit report shows accounts you didn't open
• All of the above

You must establish credit in order to buy a house.

• True
• False