2020-2021 Semester Exam Review - Credit

Which is an example of a secured loan?

• Credit Card

• Layaway

• Mortgage

• Personal Loan of $2,500

What information is NOT included when calculating an individual’s credit score?

• Length of credit history

• Salary

• Outstanding debt

• Inquiries for new credit

Why will a low credit score affect an individual financially?

• Individual will have to pay lower monthly payments on loans.

• Individual will pay lower interest rates for credit.

• Purchase price for items will be higher.

• Individual will pay higher interest rates for credit.

Which is the following is the BEST way to improve a credit score?

• Review your billing statement carefully every month.

• Check your credit report for accuracies once a year.

• Mail payments at least five working days before due date.

• Contact creditors if you have trouble paying bills on time.

What is the type of bankruptcy where creditors ask a court to declare a person bankrupt?

• Chapter 7

• Chapter 13

• Involuntary

• Voluntary

Chapter 13 bankruptcy is a compulsory, court-enforced plan to repay a portion of debts over a period of how long?

• 6 months

• 1 year

• 3 years

• 7 years

Which of the following is NOT a service performed by a credit counselor?

• Help you apply for a new credit identity.

• Eliminate or reduce late charges and fees.

• Consolidate your debts and help you pay them off faster.

• Prevent judgments, garnishes, and bankruptcy.

How is Chapter 7 bankruptcy different from Chapter 13?

• Chapter 7 asks the court to declare you unable to pay your bills.

• You can keep certain property under Chapter 7

• You are not required to sell your assets under Chapter 13.

• People filing Chapter 7 bankruptcy have to have a certain income.

Which of the following statements about bankruptcy is NOT true?

• Bankruptcy gives people who are heavily in debt a fresh start.

• Future credit will be easy to obtain for people who have filed bankruptcy.

• Bankruptcy will not affect certain types of debts a debtor may have.

• The laws were recently changed to make it harder to declare bankruptcy.

Which of the following is a characteristic of installment credit?

• Varying interest rates depending on the repayment history.

• Varying credit limits depending upon the loan balance.

• A continuous loan the borrower has to repay with a revolving balance.

• Make equal payments on a regular basis until the loan is repaid.