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WorksheetsChapter 4 Personal Finance: Debt
Total questions: 25
Worksheet time: 13mins
Which of the following best summarizes how the use of a credit card for purchases instead of cash can change one's spending behavior?
Spending behavior does not matter as long as you pay off the credit card balance each month
Studies show that consumers typically spend more when using credit as opposed to cash purchases
Studies show that there is no change in spending behavior whether a person uses cash or credit.
People typically spend less when they know that they are earning credit card "rewards."
Which of the following statements is false?
Under FCRA, creditors must notify consumers if they deny credit based on a credit report file, and they must also tell the consumer which of the three credit bureaus provided the report.
Prior to the FCRA, consumers were unable to challenge errors in their credit reports.
Under FCRA, consumers are allowed to receive one free credit report every five years.
The U.S. Congress enacted the Fair Credit Reporting Act to address concerns over consumer credit report accuracy, privacy and fairness.
Which of the following is a sign that your identity may have been stolen?
Bank and billing statements don't arrive on time
A call from a collection agency about a debt you didn't incur
Your credit report shows accounts you didn't open
All of the above
Which of the following is not a factor in determining a FICO score?
Getting a personal loan from a bank
Paying cash for all purchases
Using credit cards
Taking out a mortgage on a house
Which of the following is not a good idea for getting out of debt?
Quit borrowing money
Get a part-time job or work overtime
Sell something
Borrow money from your parents to pay for the debt
Teens are a huge target of credit card companies today.
True
False
Which of the following is not a recommended step in the Drive Free method of purchasing a car?
Plan your purchase in advance using the sinking fund method of saving.
Explore new car dealerships for the best interest rate.
Place your savings in a mutual fund so that your money can make more money.
Start with an inexpensive car and gradually move up in car value as your savings increases.
Which of the following is not a credit myth?
Debt is a tool and should be used to create prosperity.
Borrowing money can have serious consequences and prevent you from building wealth.
You have "arrived" financially once you get approved for a credit card.
The lottery and other forms of gambling will make you rich.
You must establish credit in order to buy a house.
True
False
If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage? Select all that apply
History of rental and utility payments
Amount of your down payment and employment history
You cannot get a mortgage without a credit history
Which of the following is the most cost-effective option for purchasing a home?
The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%.
Get a 30-year mortgage with a 20% down payment.
Get a 15-year mortgage with a 5% down payment.
Get a 30-year mortgage so that you can get the lowest possible payments.
Co-signing a loan is a good way to help a friend or relative.
True
False
Which of the following things cannot be done with a debit card but can be done with a credit card?
Rent a car
Purchase something online
Purchase an airline ticket
Go into debt
You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity.
True
False
What factors affect a credit score? Select all that apply
Type of debt
New debt
Duration of debt
Which of the following is not recommended in the debt snowball method of getting out of debt?
List your debts in order from smallest to largest balance and focus on paying the smallest debt off first.
Every extra dollar you get should be thrown at the largest debt first.
Every time you pay off a debt, you add its old minimum payment to your next debt payment.
Attack your debt with intensity.
Under the Fair Credit Reporting Act (FCRA), any person or organization may check a person's credit information without having a legitimate need.
True
False
What is paycheck garnishment?
A court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck
Process of taking something back for failure to make payments
A legal procedure for dealing with debt problems of individuals and businesses
Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments
You need to have a credit card to rent a car or check in to a hotel.
True
False
A credit score is intended to measure:
The amount of money you have in the bank
Your financial success
Your income level
The risk of your not repaying debt
It is okay to use a credit card if you pay it off every month.
True
False
The Federal Trade Commission (FTC) is one of many U.S. federal agencies that regulate the consumer credit system and enforce the laws related to it.
True
False
There are three credit bureaus: Experian, TransUnion and Equifax.
True
False
Individual account information is removed from your credit report seven years after the last activity on the account, except for Chapter 7 bankruptcy, which stays on your credit report for:
20 years
10 years
5 years
1 year
If you are a victim of identity theft, you are only responsible for paying back half of the debt.
True
False
