Question 1

A debit card:

Accepted Answer

A)  decreases your account at the moment you buy goods or services.
B)  extends credit and delays your payment.
C)  is a new type of a credit card issued by VISA International.
D)  is another name for a travel and entertainment card.
E)  typically has a credit limit of $1,000.F) A) and D)
G) None of the above

Question 2

Which federal consumer credit law provides specific cost disclosure requirements for the annual percentage rate and the finance charges as a dollar amount?

Accepted Answer

A)  Fair Debt Collection Practice Act
B)  Equal Credit Opportunity Act
C)  Fair Credit Billing Act
D)  Fair Credit Reporting Act
E)  Truth in Lending ActF) None of the above
G) B) and E)

Question 3

If you have a complaint about a bank in connection with any of the federal credit laws,who should you contact?

Accepted Answer

A)  National Credit Union Association
B)  Federal Trade Commission
C)  Federal Reserve System
D)  Comptroller of the Currency
E)  Bank Vice-PresidentF) D) and E)
G) B) and D)

Question 4

Which federal consumer credit law places the burden of proof for accurate credit information on the credit reporting agency rather than on the consumer?

Accepted Answer

A)  Consumer Credit Reporting Reform Act
B)  Truth in Lending Act
C)  Fair Credit Billing Act
D)  Equal Credit Opportunity Act
E)  Fair Debt Collection Practices ActF) C) and E)
G) All of the above

Question 5

Larry Arnold gets a direct loan of money to go on vacation with his family.There is no down payment,and he will repay the loan over the next twelve months.What type of credit did Larry use?

Accepted Answer

A)  Installment sales credit
B)  Installment cash credit
C)  Single lump-sum credit
D)  Revolving check credit
E)  Incidental creditF) C) and D)
G) All of the above

Question 6

Which FICO credit score would represent the least risky borrower?

Accepted Answer

A)  400
B)  550
C)  625
D)  700
E)  825F) A) and C)
G) A) and B)

Question 7

The Equal Credit Opportunity Act is very specific about how a person's age may be used in credit decisions.

Accepted Answer

A) True 
 B)False

Question 8

Interest is a periodic charge for the use of credit.

Accepted Answer

A) True 
 B)False

Question 9

Which federal credit law protects you against an unauthorized use of your credit card?

Accepted Answer

A)  Fair Credit Reporting Act
B)  Fair Credit Billing Act
C)  Equal Credit Opportunity Act
D)  Fair Debt Collection Practices Act
E)  Truth in Lending ActF) None of the above
G) A) and E)

Question 10

In addition to department stores,where else is a good place to obtain your first credit card?

Accepted Answer

A)  Banks
B)  Credit unions
C)  Savings and loans associations
D)  Gasoline companies
E)  Investment companiesF) B) and E)
G) C) and D)

Question 11

When resolving a billing dispute,a creditor must either tell you why the bill is correct or:

Accepted Answer

A)  correct your account within two billing periods.
B)  send this information to a credit bureau.
C)  require you to pay the bill in full and then credit your account if the error is found.
D)  start the collection process.
E)  demand that you surrender your credit card.F) C) and D)
G) C) and E)

Question 12

A bank that is looking at your past payment records on your loans is most likely examining which aspect of the 5 Cs of lending?

Accepted Answer

A)  Character
B)  Capacity
C)  Collateral
D)  Capital
E)  ConditionsF) A) and E)
G) A) and D)

Question 13

A valuable asset pledged to obtain a loan and subject to repossession upon default to satisfy the debt is called:

Accepted Answer

A)  capacity.
B)  character.
C)  capital.
D)  collateral.
E)  conditions.F) B) and E)
G) B) and C)

Question 14

The debt payments-to-income ratio is calculated by dividing your total liabilities by your net worth.

Accepted Answer

A) True 
 B)False

Question 15

Maryann Lawrence wants to get a loan in just her name.She knows the creditor cannot:

Accepted Answer

A)  refuse her credit if she is creditworthy.
B)  consider income from her part-time job.
C)  consider the payment history of all her joint accounts.
D)  consider alimony payments she receives from her ex-husband.
E)  consider child support payments she receives from her ex-husband.F) A) and D)
G) B) and E)

Question 16

How many alternatives do most consumers have in financing current purchases?

Accepted Answer

A)  1
B)  2
C)  3
D)  4
E)  unlimitedF) B) and D)
G) B) and C)

Question 17

Consumer credit dates back to colonial times.

Accepted Answer

A) True 
 B)False

Question 18

Using a bank credit card,such as Visa or MasterCard,is an example of closed-end credit.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is true of the baby boom generation?

Accepted Answer

A)  Represents about 30% of the population
B)  Holds nearly 60% of the outstanding debt
C)  Extensively uses debt
D)  Born between 1946 and 1964
E)  All of theseF) A) and D)
G) B) and D)

Question 20

Which of the following is a credit bureau?

Accepted Answer

A)  Federal Reserve
B)  Federal Trade Commission
C)  Better Business Bureau
D)  Experian
E)  FICOF) A) and C)
G) A) and B)

Exam 6: Introduction to Consumer Credit

Which federal credit law protects you against an unauthorized use of your credit card?

Correct AnswerverifiedShow Answer

Interest is a periodic charge for the use of credit.

Correct AnswerverifiedShow Answer

If you have a complaint about a bank in connection with any of the federal credit laws,who should you contact?

Correct AnswerverifiedShow Answer

Which FICO credit score would represent the least risky borrower?

Correct AnswerverifiedShow Answer

Which federal consumer credit law places the burden of proof for accurate credit information on the credit reporting agency rather than on the consumer?

Correct AnswerverifiedShow Answer

The Equal Credit Opportunity Act is very specific about how a person's age may be used in credit decisions.

Correct AnswerverifiedShow Answer

A valuable asset pledged to obtain a loan and subject to repossession upon default to satisfy the debt is called:

Correct AnswerverifiedShow Answer

Maryann Lawrence wants to get a loan in just her name.She knows the creditor cannot:

Correct AnswerverifiedShow Answer

Using a bank credit card,such as Visa or MasterCard,is an example of closed-end credit.

Correct AnswerverifiedShow Answer

Which of the following is a credit bureau?

Correct AnswerverifiedShow Answer

A bank that is looking at your past payment records on your loans is most likely examining which aspect of the 5 Cs of lending?

Correct AnswerverifiedShow Answer

Consumer credit dates back to colonial times.

Correct AnswerverifiedShow Answer

In addition to department stores,where else is a good place to obtain your first credit card?

Correct AnswerverifiedShow Answer

How many alternatives do most consumers have in financing current purchases?

Correct AnswerverifiedShow Answer

The debt payments-to-income ratio is calculated by dividing your total liabilities by your net worth.

Correct AnswerverifiedShow Answer

Larry Arnold gets a direct loan of money to go on vacation with his family.There is no down payment,and he will repay the loan over the next twelve months.What type of credit did Larry use?

Correct AnswerverifiedShow Answer

When resolving a billing dispute,a creditor must either tell you why the bill is correct or:

Correct AnswerverifiedShow Answer

Which federal consumer credit law provides specific cost disclosure requirements for the annual percentage rate and the finance charges as a dollar amount?

Correct AnswerverifiedShow Answer

Which of the following is true of the baby boom generation?

Correct AnswerverifiedShow Answer

A debit card:

Correct AnswerverifiedShow Answer

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