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WorksheetsFoundations in Personal Finance Chapter 4
Total questions: 35
Worksheet time: 30mins
Which of the following is NOT a factor in creating a FICO score?
Getting a personal loan from a bank
Using credit cards
Paying cash for all purchases
Taking out a mortgage on a house
Which of the following makes you go further into debt?
Quit borrowing money
Get a part-time job or work overtime
Sell something
Borrow money from your parents to pay for debt
Which of the following can't be done with a debit card but can be done with a credit card?
Go into debt
Rent a car
Purchase something online
Purchase an airline ticket
What factors affect a credit score
Type of debt
New debt
Length of debt
All of the above
Which of these is the most cost effective way to purchase a house?
Get a 15-year mortgage with a 5% down payment
Get a 30 year mortgage so you can get the lowest possible payments
Save up and pay for the house with cash, if that is not an option then get no more than a 15-year mortgage with at least 10% downpayment.
Get a 30 year mortgage with a 20% down payment.
Which is not suggested in the debt snowball method of paying off your debt?
List your debts in order from smallest to biggest and pay off the smallest one first.
Every extra dollar you get should be thrown at the largest debt first
Attack your debt with intensity
Every time you pay off a debt, you add its old minimum payment to the next debt payment
What is paycheck garnishment?
A court-ordered attachement that allows a lender to take money directly from your paycheck
A process of taking something back for failure to make payments
Process by which the lender of a mortgage sells the property of a homewowner who has falled behind on payments
A legal prceedure for dealing with debt problems of people and businesses.
Which of the following best summarizes how the use of a credit card for purchases instead of cash can change your spending behavior?
Spending behavior does not matter as long as you pay off the credit card balance each
month.
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 ʺrewards.ʺ
Studies show that consumers typically spend more when using credit as opposed to cash purchases.
Which of the following is NOT a credit myth?
The lottery and other forms of gambling will make you rich.
You have ʺarrivedʺ financially once you get approved for a credit card.
Debt is a tool and should be used to create prosperity.
Borrowing money can have serious consequences and prevent you from building wealth.
If you do not have a FICO score, what factors will determine whether or not you qualify for a
mortgage?
History of rental and utility payments
Amount of your down payment and employment history
You cannot get a mortgage without a credit history
A and B
A credit score is intended to measure:
Your financial success
The risk of your not repaying debt
Your income level
The amount of money you have in the bank
Which of the following is a sign that your identity may have been stolen?
A call from a collection agency about a debt you didnʹt incur
Bank and billing statements donʹt arrive on time
Your credit report shows accounts you didnʹt open
All of the above
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 three credit bureaus: Experian, TransUnion and Equifax.
True
False
You can and should obtain a free copy of your credit report every year 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
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 counseling
debt snowball
A detailed report of an individualʹs credit history
credit report
cash flow statement
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
loan term
loan financing
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 (annual percentage rate)
annual fee
A decrease or loss in value
inflation
depreciation
A yearly fee thatʹs charged by the credit card company for the convenience of the credit card
interest rate
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
introductory rate
new customer fee
A long-term rental agreement on a car; a form of secured long-term debt
loan
lease
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.
secured
upside down
A card issued by a bank that allows users to FINANCE a purchase.
credit card
debit card
Explain why financing a car is a bad idea.
Describe the negative consequences of taking on debt. What effect can debt have on your
future?
What are some things you can do to protect your personal information?
Explain how the debt snowball works.
What should you do if you think you are a victim of identity theft?
