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WorksheetsDave Ramsey, Chapter 4 - DEBT
Total questions: 40
Worksheet time: 3hrs 20mins
Which of the following is not a factor in determining a FICO score?
Using credit cards
Paying cash for all purchases
Taking out a mortgage on a house
Getting a personal loan from a bank
Which of the following is NOT a good idea for getting out of debt?
Borrow money from your parents to pay for the debt
Sell something
Quit borrowing money
Get a part-time job or work overtime
Which of the following things cannot be done with a debit card but can be done with a credit card?
Purchase an airline ticket
Purchase something online
Rent a car
Go into debt
Jake's credit application has been declined because of his negative credit history. Which statement is most likely to be true?
Jake has received 3 traffic tickets in the past 2 months
Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage
Jake pays his bills consistently and on time
Jake has applied for 4 credit cards and a car loan in the past 6 weeks
Paying the minimum payment on a credit card every month will . . .
allow the cardholder to avoid paying any interest charges
help the cardholder create a plan for paying off a credit card in a decent amount of time
make the final amount paid substantially higher than the amount initially charged to the card
pay a large percentage of the total balance owed every month
Which of the following is an act of identity theft?
Having the same name as another person
Receiving permission to use a parent's credit card for school clothes
Wrongfully acquiring and using someone's personal identification
Taking the identity of another individual as inspiration for a costume
Matt wants to guard his personal information. Which personal information is LEAST LIKELY to be used by scammers?
Phone numbers
Driver's license numbers
Credit card numbers
Bank account numbers
Which of the following actions will not make an individual vulnerable to identity theft?
Throwing mail in the garbage
Paying cash for a movie ticket
Responding to an email from your depository institution (bank)
Using a computer without updated spyware
What factors affect a credit score?
Type of debt
Duration of debt
New debt
All of these affect a credit score
Which of the following statements is false?
Under FCRA, consumers are allowed to receive one free credit report every 5 years.
Prior to the FCRA, consumers were unable to challenge errors in their credit reports.
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 3 credit bureaus provided the report.
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 NOT a recommended step in the Drive Free method of purchasing a car?
Start with an inexpensive car and gradually move up in car value as your savings increases.
Explore new car dealerships for the best interest rate.
Plan your purchase in advance using the sinking fun method of saving.
Place your savings in a mutual fund so that your money can make more money.
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 so that you can get the lowest possible payments.
Get a 15-year mortgage with a 5% down payment.
Get a 30-year mortgage with a 20% down payment.
Which of the following is NOT recommended in the debt snowball method of getting out of debt?
Every extra dollar you get should be thrown at the largest debt first.
List your debts in order from smallest to largest balance and focus on paying the smallest debt off first.
Attack your debt with intensity.
Every time you pay off a debt, you add its old minimum payment to your next debt payment.
What is paycheck garnishment?
A legal procedure for dealing with debt problems of individuals and businesses.
Process of taking something back for failure to make payments.
A court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck.
Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments.
Which of the following best summarizes how the use of a credit card for purchases instead of cash can change one's spending behavior?
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.
Spending behavior does not matter as long as you pay off the credit card balance each month.
People typically spend less when they know that they are earning credit card "rewards".
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.
The lottery and other forms of gambling will make you rich.
You have "arrived" financially once you get approved for a credit card.
If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?
Both your history of payments and amount of your down payment.
Amount of your down payment and employment history.
You cannot get a mortgage without a credit history.
History of rental and utility payments.
A credit score is intended to measure . . .
the risk of your not repaying debt.
the amount of money you have in the bank.
your income level.
your financial success.
Which of the following is a sign that your identity may have been stolen?
A call from the collection agency about a debt you didn't incur.
Bank and billing statements don't arrive on time.
Your credit report shows accounts you didn't open.
All of these signs your identity has been stolen.
Individual account information is removed from your credit report 7 years after the last activity on the account, except for Chapter 7 bankruptcy, which stays on your credit report for . . .
5 years.
1 year.
20 years.
10 years.
You must establish credit in order to buy a house.
True
False
If you are a victim of identity theft, you are only responsible for paying back half of the debt.
True
False
There are 3 credit bureaus: Experian, TransUnion, & Equifax.
True
False
You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity.
True
False
You need to have a credit card to rent a car or check in to a hotel.
True
False
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 the many U.S. federal agencies that regulate the consumer credit system and enforce the laws related to it.
True
False
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
Teens are a huge target of credit card companies today.
True
False
Co-signing a loan is a good way to help a friend or relative.
True
False
Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments.
Credit report
Depreciation
Loan term
Upside down
Debt snowball
A detailed report of an individual's credit history.
Lease
Upside down
Annual percentage rate (APR)
Credit card
Credit report
Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated.
Introductory rate
Lease
Loan term
Debt snowball
Annual fee
Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
Annual Percentage Rate (APR)
Credit report
Upside down
Credit card
Depreciation
A decrease or loss in value.
Annual Percentage Rate (APR)
Upside down
Lease
Depreciation
Introductory Rate
A yearly fee that's charged by the credit card company for the convenience of the credit card.
Upside down
Depreciation
Lease
Credit Card
Annual fee
An interest rate charged to a customer during the early stages of a loan; the rate often goes up after a specified period of time.
Debt snowball
Annual Percentage Rate (APR)
Credit Report
Upside down
Introductory rate
A long-term rental agreement on a car; a form of secured long-term debt.
Loan term
Lease
Credit card
Depreciation
Annual fee
When a person owes more on an item (like a car or house) than it is worth, the person is said to be ___ on the loan.
Credit card
Debt snowball
Introductory rate
Upside down
Lease
A card issued by a bank that allows users to finance a purchase.
Credit card
Credit report
Debt snowball
Annual fee
Loan term
