PF Test (Ch. 4)

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

Go into debt

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:

10 years

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

A call from a collection agency about a debt you didn't incur, bank and billing statements don't arrive on time, and your credit report shows accounts you didn't open.

What is paycheck garnishment?

A court-ordered attachment that allows a lender to take monies owed directly formal borrower's paycheck.

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.

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.

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.

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 and amount of your down payment and employment history.

Which of following is not a factor in determining a FICO score?

Paying cash for all purchases.

Which of the following best summarizes how 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.

Which of the following is the most cost-effective 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.

What factors affect a credit score?

Type of debt, new debt, and duration of debt

Which of the following statements is false?

Under FCRA, consumers are allowed to receive one free credit report every 5 years.