W!SE Prep: Credit

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.

A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take?

• Notify a credit reporting agency in order to avoid a late fee
• File for bankruptcy in order to maintain ones current credit score.
• Notify the credit card companies in order to negotiate a new payment plan.
• Contact the Internal Revenue Service in order to avoid paying income tax this year.

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

• a collateralized loan.
• a custodial payment.
• an unsecured loan.
• a sales agreement.

What is meant by an uncollateralized loan?

• A loan not backed by a co-signer who agrees to cover the amount of the loan.
• A personal loan without assets to cover the loan amount.
• A home equity loan.
• A loan taken on a life insurance policy.

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

• A mortgage.
• A car loan.
• Department store charge cards
• Installment loans.

When a person declares bankruptcy that fact will appear on the persons 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.

Which of the following lenders charge the highest interest rate?

• Bank
• Credit union
• Pawn shop
• Finance company

How can you avoid becoming a victim of identity theft?

• Avoid giving your Social Security number on a phone call you did not initiate
• Leave your wallet containing personal information where it can be stolen
• Keep your PIN on your ATM card
• Avoid using your credit card to charge purchases on the phone

A company offers direct deposit of employees' earnings. The company will still provide each employee with a statement that lists the employees

• gross pay only
• net pay only.
• gross pay and the amount and type of deductions only.
• gross pay, the amount and type of deductions and net pay.

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