ch 4 review

You need to have a credit card to rent a car or check in to a hotel.

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:

10 years

If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?

A and B: history of rental and utility payments and amount of your down payment and employment history

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan

APR

Which of the following is a sign that your identity may have been stolen?

All of the above: A call from a collection agency about a debt you didnt incur bank and billing statements dont arrive on time, and your credit report shows accounts you didnt open

What factors affect a credit score?

All of the above: Type of debt, new debt, and duration of debt.

Co-signing a loan is a good way to help a friend or relative.

False

If you are a victim of identity theft, you are only responsible for paying back half of the debt.

False

Which of the following is not a good idea for getting out of debt?

Borrow money from your parents to pay for the debt

Which of the following is not a credit myth?

Borrowing money can have serious consequences and prevent you from building wealth.

A detailed report of an individualʹs credit history A credit report B cash flow statement

Credit report

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

Debt Snowball

Which of the following is not a recommended step in the Drive Free method of purchasing a car?

Explore new car dealerships for the best interest rate.

It is okay to use a credit card if you pay it off every month.

False

A long-term rental agreement on a car; a form of secured long-term debt

lease

Which of the following is NOT a factor in determining a FICO score?

Paying cash for all purchases

Which of the following best summarizes how the use of a credit card for purchases instead of cash can change oneʹs spending behavior?

Studies show that consumers typically spend more when using credit as opposed to cash purchases.

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%.

A credit score is intended to measure:

The risk of your not repaying debt

Teens are a huge target of credit card companies today.

True

There are three credit bureaus: Experian, TransUnion and Equifax.

True

You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity.

True

A yearly fee thatʹs charged by the credit card company for the convenience of the credit card

annual fee

A card issued by a bank that allows users to finance a purchase

credit card

A decrease or loss in value

depreciation

You must establish credit in order to buy a house.

false

Which of the following things cannot be done with a debit card but can be done with a credit card?

go into debt

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

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

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.

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