Personal Finance Chapter 4 Test - Ramsey Classroom

Something that credit card commercials don't show you is...

• People making payments for months or years on those credit card purchases

• How much your credit score will grow right away

• How happy your parents will be that they don't have to lend you cash anymore

• How great your life will be with payments

When a homeowner takes out a home equity line of credit (HELOC), that loan can only be used for home repairs and renovations.

• True

• False

Banks and lenders use credit scores to determine...

• The likelihood that someone is able to repay debt

• A person's financial responsibility

• How much collateral someone has available to put up for a loan

• How successful someone is

Making purchases with a credit card means that you're borrowing money with interest, and ____ pay much higher interest rates.

• Young people

• Rich people

• Old people

• College graduates

When you finance a new car, you will end up paying more than the sticker price.

• True

• False

While it may not always appear so, the majority of Americans live paycheck to paycheck.

• True

• False

Your greatest tool to building wealth is ____.

• Tax cuts

• Single stocks

• Your income

• Your credit score

____ require the borrower to put up collateral for the loan.

• Unsecured loans

• Interest rates

• Revolving credit

• Secured loans

Which of the following is part of the formula that determines a person's FICO score?

• Their income level during a one year period

• The percent of income that they invest into mutual funds

• The dollar amount in their savings funds

• Their history of payments made to lenders

There are certain things, like renting a car or booking a hotel room, that you cannot do without having a credit card.

• True

• False