MoneyPower: Credit (10 Questions)

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.

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

• A mortgage.

• A car loan.

• Department store charge cards.

• Installment loans.

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.

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.

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

• True

• False

Redlining is characterized by a lender who denies a loan:

• Based on the customer's ability to repay

• Because of a customer's age

• To customers applying for a loan over a certain dollar amount

• To customers living in certain geographic areas

When a borrower fails to repay a loan and there is a co-signer on the loan, the most likely result will be

• The co-signer will be held responsible for the repayment of the entire loan plus fees or penalties.

• Only the co-signer’s credit report will show that there has been a default on the loan.

• The co-signer will be held responsible for one-half the repayment of the loan.

• The co-signer has the opportunity to renegotiate the loan.

One of Andre's seldom-used credit cards has been stolen without his knowledge. When he gets his monthly statement, he realizes that someone else has been using the card and reports it stolen. The maximum amount of the unauthorized purchases he is he liable for is:

• zero

• $50

• The total amount

• $25

What is a credit score?

• A number used to determine how much credit to extend to a person.

• A measure used to indicate a person’s gross wealth.

• A reward system that is based on the number of credit cards a person has.

• A formula based solely on a person’s earnings.