Chapter 7

Negative credit information stays on the record for ___ years

7

They score your credit rating based​ on: A. FICO for credit​ scoring, which is based on payment history and levels of debt. B. LIFO for credit​ scoring, which is based on payment history and levels of debt. C. FICO for credit​ scoring, which is based on the size of the loan you are trying to get. D. LIFO for credit​ scoring, which is based on the size of the loan you are trying to get.

a. FICO for credit​ scoring, which is based on payment history and levels of debt.

A step you should not take if you become a victim of identity theft​ is: A. Open new accounts with an alias. B. Contact the local police department. C. Contact all your creditors. D. Act immediately to ensure that further damage is not incurred.

a. Open new accounts with an alias.

The new EMV​ cards: A. have a computer chip that is used to authenticate transactions. The computer chip creates a unique identifier for each transaction and prevents identity thieves from being able to use your card information for other purchases. B. have a computer chip that is used to authenticate transactions. The computer chip creates report for each store you shop at and prevents identity thieves from being able to use your card information for other purchases. C. have a computer chip that is used to authenticate transactions. The computer chip creates a unique identifier for each transaction and allows identity thieves to be able to use your card information for other purchases. D. have a computer chip that is used to record transactions. The computer chip creates a unique report for each transaction and allows you to see if identity thieves are using your card information for other purchases.

a. have a computer chip that is used to authenticate transactions. The computer chip creates a unique identifier for each transaction and prevents identity thieves from being able to use your card information for other purchases.

The Equal Credit Opportunity Act prohibits that credit be denied due to all of the following reasons ​except: A. insurance coverage. B. gender. C. religious status. D. natural origin.

a. insurance coverage.

One of the factors is used to determine your credit score and how it is weighted by FICO​ is: A. Payment history is weighted at 30 percent. B. Amount of monthly credit used is weighted at 30 percent. C. Amount of monthly credit used is weighted at 25 percent. D. Length of creditor relationship and number of inquiries is weighted at 25 percent.

b. Amount of monthly credit used is weighted at 30 percent.

Which of the following is not a step you can take to safeguard your personal​ information? A. Remove your name and address from directories comma including the local phone directory. B. Destroy all your education records. C. Eliminate any unnecessary documents in your wallet or purse. D. Do not carry a PIN number with you.

b. Destroy all your education records.

The three major credit bureaus​ are: A. Equifax comma LendCheck comma and Trans Union. B. Equifax, Experian, and Trans Union. C. Equifax comma Experian comma and Union Credit. D. Accountifax comma Experian comma and Union Credit.

b. Equifax, Experian, and Trans Union.

If you are denied​ credit, do you have the right to know the reason for the​ denial? A. Yes, the applicant must be notified with the reason within 10 days of the denial of a credit application. B. Yes, the applicant must be notified with the reason within 30 days of the denial of a credit application. C. No, the application and review is private and no disclosure is required. D. It depends on the type of credit you are seeking.

b. Yes, the applicant must be notified with the reason within 30 days of the denial of a credit application.

Social​ media: A. can block personal information from thieves. People often do not post enough personal information to enable someone to obtain credit in your name and even access your bank account. B. can be a valuable source of personal information for thieves. People often post enough personal information to enable someone to obtain credit in your name and even access your bank account. C. can be a valuable source of general information for thieves. People often post enough personal information to enable someone to know when you are out of town. D. can be a valuable source of personal information for thieves. People do not post enough personal information to enable someone to obtain credit in your name and even access your bank account.

b. can be a valuable source of personal information for thieves. People often post enough personal information to enable someone to obtain credit in your name and even access your bank account.

installment credit: A. grants varying amounts of credit to consumers based on debt level and credit payment history. B. is issued for specific purchases but gives the borrower a longer time to repay the loan. C. requires that borrowers only pay interest in the short​ term, and the principal at some time in the future. D. is issued to consumers for very short periods of time to make specific purchases.

b. is issued for specific purchases but gives the borrower a longer time to repay the loan.

Closing a credit card account can negatively impact your credit score​ because: A. it will increase the amount of credit available and will therefore increase the percentage of credit utilization if you currently owe money to creditors. A higher percentage of credit utilization will lower your credit score. B. it will reduce the amount of credit available and will therefore increase the percentage of credit utilization if you currently owe money to creditors. A higher percentage of credit utilization will lower your credit score. C. it will reduce the amount of credit available and will therefore decrease the percentage of credit utilization if you currently owe money to creditors. A higher percentage of credit utilization will lower your credit score. D. it will reduce the amount of credit available and will therefore increase the percentage of credit utilization if you currently owe money to creditors. A lower percentage of credit utilization will lower your credit score.

b. it will reduce the amount of credit available and will therefore increase the percentage of credit utilization if you currently owe money to creditors. A higher percentage of credit utilization will lower your credit score.

VantageScore​ uses: A. different factors to determine creditworthiness but the weightings may be similar. In general both FICO and VantageScore should generate similar ratings of overall creditworthiness. B. similar factors to determine creditworthiness but the weightings may be different. In general both FICO and VantageScore should generate similar ratings of overall creditworthiness. C. different factors to determine creditworthiness but the weightings may be similar. In general both FICO and VantageScore should generate different ratings of overall creditworthiness. D. similar factors to determine creditworthiness but the weightings may be different. In general both FICO and VantageScore should generate different ratings of overall creditworthiness

b. similar factors to determine creditworthiness but the weightings may be different. In general both FICO and VantageScore should generate similar ratings of overall creditworthiness.

How does credit history impact your ability to borrow​ money? A. Individuals with good credit histories can borrow money with some​ difficulty, but at more favorable interest rates. B. Individuals with poor credit histories can borrow money easier and at more favorable interest rates. C. Individuals with good credit histories can borrow money easier and at more favorable interest rates. D. Individuals with good credit histories can borrow money easier and at less favorable interest rates.

c. Individuals with good credit histories can borrow money easier and at more favorable interest rates.

A weak credit report can affect you​ because: A. credit history is reviewed to evaluate the trustworthiness of the borrower. B. assets are reviewed to evaluate the amount of credit currently serviced and the timeliness of the past payments. C. credit history is reviewed to evaluate the amount of credit currently serviced and the timeliness of the past payments. D. assets are reviewed to determine if personal information is accurate.

c. credit history is reviewed to evaluate the amount of credit currently serviced and the timeliness of the past payments.

Which of the following is not one of the six major areas of information that may be included on your credit​ report? A. Potentially negative information from public records B. All open and closed accounts C. Family size D. Unpaid accounts turned over to a collection agency

c. family size

Utilities extend credit​ by: A. accepting credit cards. B. helping borrowers negotiate with financial institutions. C. providing a service and billing at the end of the period. D. lending money to customers upon application and review of application.

c. providing a service and billing at the end of the period.

After the passage of the Credit CARD Act students under the age of 21​ must: A. show proof of income or proof of being registered for classes at an accredited college or university B. show proof of income and have an adult​ co-sign prior to obtaining a credit card. C. show proof of income or have an adult​ co-sign prior to obtaining a credit card. D. show proof of being registered for classes at an accredited college or university and have an adult​ co-sign prior to obtaining a credit card.

c. show proof of income or have an adult​ co-sign prior to obtaining a credit card.

What is a disadvantage of using​ credit? A. The use of credit enables borrowers to buy more financial products. B. The use of credit may ultimately result in long dash term liquidity. C. It helps build a good credit score. D. The use of credit enables borrowers to buy on impulse.

d. The use of credit enables borrowers to buy on impulse.

Your credit history​ is: A. a record of how you have used credit in the past. It will contain information on any loans you have obtained and whether you will make timely payments in the future. B. a record of how you will use credit in the future. It will contain information on any loans you have obtained and whether you made timely payments. C. a record of how you have used credit in the past. It will contain information on any loans you will need in the future and whether you made timely payments in the past. D. a record of how you have used credit in the past. It will contain information on any loans you have obtained and whether you made timely payments.

d. a record of how you have used credit in the past. It will contain information on any loans you have obtained and whether you made timely payments.

You can improve your credit score​ by: A. becoming current with payments. B. making at least the minimum payments. C. reducing the debt load. D. All of the above.

d. all of the above

A reputable credit counseling​ organization: A. can help you establish a plan to repay your debt and also help you establish a budget so that you can live the lifestyle you want. B. can help you establish a plan to repay your debt and also help you establish another line of credit so that you can live within your means. C. can help you establish a plan to remove your debt from your credit history and also help you establish a budget so that you can live within your means. D. can help you establish a plan to repay your debt and also help you establish a budget so that you can live within your means.

d. can help you establish a plan to repay your debt and also help you establish a budget so that you can live within your means.

Identity theft can occur through legitimate access to your personal information​ when: A. employers sell your information. B. you are careless about protection of your data. C. you sign a waiver. D. employees have access to your personal data.

d. employees have access to your personal data.

Identify​ theft: A. cannot be prosecuted. B. is used to acquire​ money, goods, or services. C. is used to establish fraudulent identities. D. is used to acquire​ money, goods, or​ services, and also to establish fraudulent identities.

d. is used to acquire​ money, goods, or​ services, and also to establish fraudulent identities.

In addition to financial​ losses, victims of identity​ theft: A. typically lose their job. B. are rarely able to recover. C. experience property losses. D. may be detained by authorities and experience credit score deterioration.

d. may be detained by authorities and experience credit score deterioration.

The three major credit​ bureaus: A. check with each other to see that they have the same information. B. may produce a different score because they calculate it differently. C. will always produce the same score. D. may produce a different score because the information each bureau receives on the credit applicant may vary.

d. may produce a different score because the information each bureau receives on the credit applicant may vary.

A disadvantage to using a credit counseling organization​ is: A. there are some unscrupulous credit counseling firms that charge low fees and provide very little help with your future financial problems. B. there are some trustworthy credit counseling firms that charge high fees and provide very little help with your current financial problems. C. there are some unscrupulous credit counseling firms that charge no​ fees, but still provide a great deal of help with your current financial problems. D. there are some unscrupulous credit counseling firms that charge high fees and provide very little help with your current financial problems.

d. there are some unscrupulous credit counseling firms that charge high fees and provide very little help with your current financial problems.

Identity theft occurs when any​ individual: A. seeks your personal identifying information without your permission. B. uses your name as their own. C. impersonates you. D. uses your personal identifying information for personal gain without your permission.

d. uses your personal identifying information for personal gain without your permission.

You should review your credit report from each of the three major credit bureaus at least

twice a year