Review for Credit Quiz

A person with large balances of credit that they cannot pay back should:

• file for bankruptcy

• tell the credit card company and work out a new plan

• contact the IRS to try to get out of taxes

• tell the credit reporting agency

What law prevents lenders from charging too much interest?

• fair debt act

• fair credit reporting act

• truth in lending act

• usury

Consumer finance companies, who give loans to people with bad credit, are known as

• banks

• savings associations

• small loan companies

• purchase loan lenders

What law requires the total cost of credit (finance charge + APR) to be enclosed in the loan agreement so you can comparison shop?

• usury

• the truth in lending act

• fair credit act

• fair debt act

The annual percentage rate (APR) is

• the true cost of credit (interest + fees)

• just the interest rate

• just the fees

• the principal amount of the loan

What is an example of closed end credit (also known as installment loans)

• cash card

• debit card

• mortgage

• credit card

What is an example of open end credit (also known as revolving credit)

• credit card

• mortgage

• car loan

• student loan

When you charge an item on your credit card, you create

• savings

• debt

• investment

• cash

How can a young person start to establish credit?

• borrow money from a lender

• making someone else pay their loan for them

• open checking account and make regular deposits

• max out all of their credit cards

If you mail your credit card bill on the due date, it will be

• on time

• late

• early

• within the grace period