W!SE Practice Questions

Which of the following is considered open-end credit?

• A mortgage

• A car loan

• Department Store Credit Cards

• Installment loans

What is meant by "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, how long will that be shown on their credit report?

• For a 3 year period

• For a 10 year period

• Until the person repays all of their debts

• Until the person receives a new loan or credit card

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

• Have at least a high school diploma

• Have 1/4 of the cost of the home for down payment

• Fulfill income guidelines

• 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 collateralized loan

• An uncollateralized loan

• An unsecured loan

• A sales agreement

A person has three credit cards with large outstanding balances. They are unable to make payments on any of them. What action should that person take?

• Notify a credit reporting agency to negotiate a new payment plan

• File for bankruptcy in order to maintain their current credit score

• Notify the credit card companies in order to negotiate a new payment plan

• Contact the IRS in order to avoid paying income taxes this year

Predatory lending practices do NOT include which of the following scenarios?

• A creditor knocking on your door and agreeing to refinance your home without viewing your credit history

• An individual getting tricked into a high rate loan with excessive fees

• A lender refinancing a loan, knowing you cannot afford to make the new payments

• A loan that you can afford with a fair interest rate that is the same (competitive) rate being charged at three other local institutions

A savings account earns the greatest amount of money when the interest rate is compounded...

• Yearly

• Quarterly

• Monthly

• Daily

If you have been denied credit, a job, a license, an insurance policy, or a loan based on your credit report, you are entitled to receive a free copy of that credit report within how many days of denial?

• 30

• 60

• 90

• There is no time limit

Redlining occurs when a lender denies a loan based on...?

• The customer's ability to repay

• The customer's age

• The customer's residence being in a certain geographic area

• The customer's race