Wise Financial Literact Test -- Credit

 Which of the following is considered to be open-end credit? 

• mortgage

• car loan

• department store charge card

• installment loans

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

•  have at least a high school diploma. 

•  have one-quarter of the cost of the home for a down-payment. 

•  fulfill income guidelines 

•  provide two individuals to co-sign the loan. 

 When a person declares bankruptcy that fact will appear on the person’s credit report 

• for a 3 year period

• for a 10 year period 

• until the person repays all debts owed

• until the person is able to receive a new credit card

 When a person brings an item to a pawnshop to obtain cash, the transaction is considered 

•  collateralized loan 

•  custodial payment 

•  unsecured loan 

•  sales agreement 

 What is a credit score? 

•  A number used to determine how much credit to extend to a person. 

•  A measure used to indicate a person’s gross wealth. 

•  A reward system that is based on the number of credit cards a person has. 

•  A formula based solely on a person’s earnings. 

 Ellen, Barbara, and Paul all charged $1,000 on their credit cards last year. who paid the most in finance charges? 

•  Ellen, who generally pays off her credit card in full but occasionally will pay the minimum when she is short of cash. 

•  Barbara, who always pays off her credit card bill in full after she receives it. 

•  Paul, who only pays the minimum amount each month. 

•  They all paid about the same since the method of payment per month does not influence the finance charge.

One example of a long-term retirement goal is to 

• end the use of credit cards. 

• close savings accounts. 

• deposit at least $100,000 in a retirement account 

• invest in high risk securities. 

Dawn graduated from high school and wants to get a credit card. How can Dawn establish credit-worthiness? 

• Getting a charge account with a low credit limit and paying the bills when possible

• Opening a checking account, making regular deposits, and avoiding penalties for insufficient funds

• Getting a small loan with a cosigner and have the co-signer repay 

• Borrowing money from friends and relatives 

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

• yearly

• quarterly

• monthly

• daily

Josh is shopping for a car loan. A friend told him to compare the actual cost of the loan for one year expressed as a percentage from three banks. He needs to ask for the: 

• Finance charge percentage 

• Annual percentage rate (APR) 

• Credit insurance percentage 

• Finance percentage