Chapter 4 Test

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

• Poeple 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 someone will repay a debt
• A persons 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