Wise Practice Test 1

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

• A.  a collateralized loan.
• B.  a custodial payment.
• C.  an unsecured loan.
• D.  a sales agreement.      

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

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

What is meant by an uncollateralized loan?

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

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?

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

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

• A.  have at least a high school diploma.
• B.  have one-quarter of the cost of the home for a down-payment.
• C.  fulfill income guidelines.
• D.  provide two individuals to co-sign the loan.

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

• A.  for a 3 year period.
• B.  for a 10 year period.
• C.  until the person repays all debts owed.
• D.  until the person is able to receive a new credit card.

Collateral is:

• A.  Something of value that secures a loan to protect the lender
• B.  Something that explains your net worth
• C.  A form of credit
• D.  Required for all loans

A creditor determines your creditworthiness based on:

• A.  Character, collateral, and capacity
• B.  Address
• C.  Gender
• D.  Education

Most Consumer Credit Counseling Services (CCCS):

• A.  Charge a fee for setting up a basic budget
• B.  Charge a fee for setting up and administering a debt repayment plan
• C.  Charge a fee for educating consumers about managing their debts
• D.  Do not charge a fee for any of their services

How can you avoid becoming a victim of identity theft?

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