Chp 7 PFM questions

Identity thieves that have systematically infiltrated corporations and financial institutions in order to facilitate large scale identity thefts are usually a part of

a well organized crime ring

Gernerally, the _____ the credit history, the ______ the credit limit

better;higher

All of the following situations are valid reasons to borrow funds EXCEPT

borrowing for everyday living expenses

paying your phone bill and electric bill on time each month will help you to establish a

credit history

The most important factor used in the FICO credit scoring model

credit payment history

Document showing information reporting your payment history and past use of credit

credit report

If you think that your identity has been stolen, the FTC recommends you do all of the following EXCEPT

destroy all of your credit cards

Which of the following is the best rule to follow in shredding information?

if you have any question, shred it

Advantages of using credit are all of the following EXCPET

increases the number of checks written

The average individual loss as a result of identity theft has in recent years been

increasing

a borrowing arrangement in which regular monthly payments of principal and interest must be made

installment credit

Of the following statements, which is NOT a disadvantage of using credit

it is more difficult to obtain repay

The safest way to order merchandise using a credit card is by A) cell phone. B) computer. C) hand-held phone. D) land line phone.

land line phone

______ is short term credit provided by some department stores to consumers to purchase specific items

non installment credit

If you receive a phone call that seeks to verify or update personal information you should

obtain their name and phone number and call them back to verify their credentials

the safest way to obtain new checks

pick them up at the ban

credit arrangement where the balance may be paid off monthly and interest is only charge on

revolving open-end circuit

All of the following are correct statement about credit EXCEPT

the interest is the total amount to be repaid

Credit scores in the 500-600 range will result in A) lower interest rates. B) higher interest rates. C) automatic acceptance of your credit application. D) preferential treatment of your application.

B. Higher interest rates

The item that receives the most weight in the FICO credit scoring system is A) the amount of credit used each month. B) credit payment history. C) credit utilization. D) credit inquiries.

B. credit payment history

Which of the following can be used by a creditor in deciding whether or not to grant credit?

Credit history

Credit issued by department stores for relatively long periods of time is called non-installment credit.

FALSE

The Identity Theft and Assumption Detternce Act has designated which federal agency as the central clearinghouse for all identity theft?

FTC

The federal agency that acts as a clearing house for all identity theft complaints

FTC

Which of the following is NOT on the 3 primary credit bureaus?

Fair Issac Corporation

Which of the following federal agencies should always be notified in the event of identity theft?

Federal Trade Commission

Improper use of credit may

Make it necessary to file for bankruptcy

Which of the following is NOT a factor in the FICO credit scoring?

Martial status

Credit extended to consumers for short periods of time to make specific purchases is A) installment credit. B) non-installment credit. C) revolving open-end credit. D) minimum limit credit.

Non-installment credit

Which of the following is the least common manner in which an identity theft victim discovers the crime?

Routine examination of credit report

something you should never carry in your wallet

SS card

copying credit information from magnetic strip on a credit card

Skimming

Which of the following is a disadvantage of using credit?

Slowing of progress toward financial goals

An advantage to credit is it eliminates the need for writing checks.

TRUE

Credit cards are an example of revolving open end credit

TRUE

Excessive use of credit can impair your ability to save money

TRUE

Federal law requires creditors to explain the reasons for the denial of credit

TRUE

Historical credit problems normally remain on a credit bureau's report for seven years and ten years for bankruptcy.

TRUE

In order to have credit in the future, you must have used it wisely in the past.

TRUE

Most identity theft victims discover the crime in a reactive as oppose to a proactive manner

TRUE

The Fair Credit Reporting ACT requires bureaus to correct any erroneous information on your credit report

TRUE

The personal cost of identity theft is difficult to measure but calculating the financial cost is an easier task

TRUE

The proper use and control of credit is the best way to build a good credit history.

TRUE

Using more credit than can be repaid is a primary cause of individual bankruptcies.

TRUE

You can begin to build a credit history by having telephone service.

TRUE

your credit report can be request on line and should be checked periodically for errors

TRUE

extends credit by providing a service and billing for the service at the end of the time preiod

Telephone company

Of the following statements, which is NOT an advantage of using credit?

Buying today and paying tomorrow seems ideal, but continual spending can lead to financial problems

Funds provided by a borrower that will be repaid in the future, with interest is credit.

FALSE

Identity theft only occurs through individuals who do not have a legitimate access to your information

FALSE

If you refrain from using any credit, it will assure you the lowest possible interest rate when you decide to use it.

FALSE

If your credit report contains deficiencies, there is really nothing you can do to correct them

FALSE

It is always easier to pay back what you borrow than to obtain credit in the first place.

FALSE

Obtaining money, goods and services are the only reasons for identity theft

FALSE

Students graduating from college today have an average debt of less than $1,000.

FALSE

The Equal Credit Opportunity Act allows a creditor to deny credit based on a persons age

FALSE

The longer you maintain relationships with creditors, the lower will be your credit score.

FALSE

TransUnion is not one of the three primary credit bureaus.

FALSE

Unless your identity is stolen by someone out of state, you should only report the crime to local law enforcement.

FALSE

Using a shredder to destroy personal data will protect you from shoulder surfing.

FALSE

With a credit rating of over 500, you should have no problem getting approval for credit purchases.

FALSE

You should be very selective in shredding documents and when in doubt, do not shred them.

FALSE

Which of the following will NOT be included on your credit report?

FICO score

Which of the following is NOT true regarding revolving open-end credit

If the balance is not paid off over a period of months, a penalty is incurred.

At your place of employment, which of the following is acceptable?

Inclusion of your SSN on your payroll register in the accounting office

If you are a victim of identity theft, you may be turned down for employment as a result of incorrect background information.

TRUE

If you find that you will not be able to make credit payment on time, the best course of action is immediately notify the creditor.

TRUE

Making sure the you have adequate credit standing should be an important part of your overall financial plan

TRUE

Posing as an employee of a financial institution to obtain information for purposes of identity theft is an example of pretexting.

TRUE

The Fair Reporting ACT limits the sharing of credit information.

TRUE

The most important element in FICO credit scoring is your payment history.

TRUE

The average credit card balance of undergraduate students is between

$3000-$7000

Which of the following would NOT help improve your credit score?

Applying for more credit cards

Very high credit scores are considered anything over ________.

700

Manipulating e-mail viruses and host files to redirect users from legitimate commercial Web sites to bogus Web sites to obtain log-in names and passwords is referred to as A) pharming. B) phishing. C) skimming. D) trolling.

A. pharming

If a person obtains your credit card number by standing close enough to you to either see your credit card or hear you speak the number during a telephone call, they are A) shoulder surfing. B) dumpster diving. C) pretexting. D) skimming.

A. shoulder surfing

Creditors prefer a ________ amount of capital and ________ collateral in the best of circumstances. A) low; low B) high; low C) high; high D) medium; low

B. high;low

using email messages from a legitimate source to obtain account information for the purpose of identity theft is referred to as a. pharming b. phishing c. skimming d. trolling

B.phishing

A credit rating (score) of ________ would normally allow you to have easy approval for credit. A) 500 B) 600 C) 700 D) 1,000

C. 700

Posing as an employee of a brokerage firm to obtain information to allegedly update your account information is an example of A) shoulder surfing. B) dumpster diving. C) pretexting. D) skimming.

C. Pretexting

Which of the following will NOT protect you from identity theft while on vacation?

Carry all credit cards, passports, and birth certificates with you

Which of the following statements is true regarding non-installment credit?

Credit is sully issued for 30 days or less

The ability to save funds is ________ when credit payments are ________. A) increased; small B) reduced; small C) reduced; large D) Both A and C are correct.

D. Both

Which of the following may result in much of your personal financial information becoming part of the public record?

Divorce

The law that prohibits denying credit due to gender, age, race, natural origin, religion or martial status is

Equal Credit Opportunity Act

______, ______, and ______ are three major credit bureaus

Equifax, Experian, TransUnion

Which of the following statements is NOT true regarding reviewing your credit report?

It will help determine if there are credit cards that you should apply for to improve your credit standing

Which of the following is NOT a disadvantage of using credit?

Makes it easier to save

Which of the following will NOT help you establish a good credit history?

Making as many purchases as possible with cash

Which of the following would NOT be contacted in all cases of identity theft?

Postal Inspection Service

Historical credit problems normally remain on a credit bureau's report for ______ years while a bankruptcy remains for ______ years

Seven; ten

A commitment to cover credit repayment under adverse conditions such as accident or illness is called

credit insurance

Identity thieves that obtain your information from the magnetic strip on your credit card are using a technique known as A) shoulder surfing. B) dumpster diving. C) pretexting. D) skimming.

d. Skimming

Identity theft occurs when an individual obtains, without your permission all of the following information EXCEPT

date and place of birth

The impact of credit _____ saving and _______ spending

decreases; increases

Which of the following items should NOT be removed from you wallet?

drivers license

Obtaining information in order to steal your identity form documents discarded by your bank is an example of

dumpster diving

obtaining information on person's identity from discarded items

dumpster diving

The cost of using credit may result in ______ spending and ______ debt

excessive; increased

something you should install on your computer to protect you from hackers and worms

firewall and virus protection

You should review your credit report at least

twice a year

When making purchases on line, you can take all of the following steps to recognize and avoid identity theft EXCEPT

use your cell phone to place credit card orders

the minimum credit score required by financial institutions

varies by instituions

Free credit reports are accessible to all US consumers at

www.annualcreditreport.com