Module 2 Borrowing Test

What is the guideline for the maximum amount you should owe each month for loan payments?

• 10% of months net income

• 10 percent of monthly gross income

• 20 percent of monthly gross income

• 20 percent of monthly net income

Which is not a type of credit?

• Car Loan

• Car registration

• Phone Service

• Credit Card

Madeline is comparing her options to borrow $5,000 to buy inventory and equipment for her new sub sandwich shop. Which loan appears to be the best deal? (Hint: Use the simple interest formula to estimate the interest.)

• 7 percent interest loan due in two years

• 8 percent interest loan due in 18 months

• 10 percent interest loan due in one year

Suki will soon turn 18 and wants to move into her own apartment in a few years. But she is worried that she won’t be able to rent an apartment without any credit history. What can Suki do to start building a good credit history?

• Rent an apartment with a friend who already has signed a lease.

• Continue to use her debit card responsibly, being careful to not overdraw on the account.

• Close her checking account to avoid bouncing a check.

• Get and use a store credit card or major credit card and pay off amounts due each month.

Which of the following agencies provide free credit reports for consumers?

• Equifax, credit unions

• Credit unions, banks

• Experian, Credit Reports Association

• TransUnion, Experian

• None of the above; you must pay a fee for any credit report

Credit experts recommend that you check the status of your credit reports at least

• every time you apply for a loan or credit card

• when you apply for your first loan or credit card

• once a year

• once every five years

Who may review your credit report without your permission?

• Your parents after you are 18 years old

• Your current employer

• The car salesperson you talked to when you inquired about a loan to buy a car

• Your doctor

Which of the following can impact your credit score?

• Getting bonus pay from your employer

• Living with your parents to cut down on monthly expenses

• Paying cash for a used car

• Making a late car loan payment

If you use a credit card to buy something online from the Internet, look for the following on the Web site page

• Locked

• SECURE

• “APPROVED BY THE FEDERAL TRADE COMMISSION”

• Https

Who is responsible for reporting identity fraud?

• The victim of fraud

• The company that accepted a stolen credit card or false information

• Any of the three credit reporting agencies

• The police