Finance Chapter 4

Which of the following is not a factor in determining a FICO score?

• Getting a personal Loan

• Using credit cards

• Paying cash for all purchases

• Taking out a mortgage on a house

Which of the following is NOT a good ideafor getting out of debt?

• Quit borrowing money

• Get a part time-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 effect a credit score?

• Type of debt

• New debt

• Duration of debt

• All of the above

Which of the following statements is false?

• Prior to the FCRA, consumers were unable to challenge errors in their credit reports

• Under FCRA, consumers are allowed to recieve one free credit report every 5 years

• FCR created an ACT to adress consumer credit accuracy

• under FCRA, creditors must notify consumers if they deny credit

Which of the following is not a step in the drive free method of purchasing a car?

• Plan your purchase in advance

• Place your settings in a mutual fund

• Start with an inexpensive car

• Explore new car dealerships for best interest rate

Which of the following is the most cost-effective option for purchasing a home?

• Get a 15 year mortgage with 5% down payment

• get a 30-year mortgage to pay the lowest possible

• The most ideal way to buy a house is with 100% down, if not no more than a 15 year fixed rate mortgage

• get a 30 year mortgage with 20% down

Which of the following is not recommended in the debt snowball method of getting out of debt?

• List your debts in order from least to greatest

• Every extra dollar you get should be thrown at the largest debt first

• Attack you debt with intensity

• Every time you pay off a debt, you add its old minimum payment to your next

What is a paycheck garnishment?

• A court-ordered attatchment that allows a lender to take money owned directly from a borrowers paycheck

• Failure to make payments

• Process of which the mortgage sells the property of a home owner who has fallen behind on payments

• A legal procedure of dealing with debt

Which of the following best summarizes how the use of a credit card for purchases instead of cash can change spending behavior?

• Spending behavior does not matter

• Studies show that their is no change in spending behavior

• People typically spend less when they know they are recieving credit renewals

• Studies show that consumers typically spend more when using credit opposed to cash purchases