Personal Finance - Dave Ramsey Chap 4

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 not a recommended step in the Drive Free method of purchasing a car?

• Plan your purchase in advance using the sinking fund method of saving.
• Place your savings in a mutual fund so that your money can make more money.
• Start with an inexpensive car and gradually move up in car value as your savings increase.
• Explore new car dealerships for the best interest rate.

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 best summarizes how the use of a credit card for purchases instead of cash can change one's spending behavior?

• Spending behavior does not matter as long as you pay off the credit card balance each month.
• Studies show that there is no change in spending behavior whether a person uses cash or credit.
• People typically spend less when they know that they are earning credit card "rewards."
• Studies show that consumers typically spend more when using credit as opposed to cash purchases.

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.

If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?

• History of rental and utility payments
• Amount of your down payment and employment history
• You cannot get a mortgage without a credit history
• A and B