BUSI 1307 Chapter 6 Quiz

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What does a lender look at before granting credit? ​a. Political interests of the borrower ​b. Friend circle of the borrower ​c. Age of the borrower ​d. Assessment of your creditworthiness ​e. Lifestyle of the borrower

d. Assessment of your creditworthiness

To establish creditworthiness and to have a good credit score, one should probably first: a. open savings and checking accounts. b. ​use credit extensively. c. ​arrange for a small loan. d. ​pay cash for all purchases. e. ​arrange for a large loan from close relatives.

a. open savings and checking accounts.

A(n) _____ is an agency that provides credit information about individual borrowers to lenders. a. credit bureau b. ​consumer bureau c. ​insurance company d. ​bank ​e. credit scoring house

a. credit bureau

When canceling a credit card, you should cut up the card and _____ that you are canceling your account. a. ​inform the issuer in writing ​b. call the issuer and tell them c. ​inform the credit bureau in writing d. ​call the credit bureau and tell them e. ​inform the future lender in writing

a. ​inform the issuer in writing

With a bank credit card, one can often avoid interest charges if: a. ​the account balance is paid in full every month. b. ​at least half the account balance is paid every month. ​c. the minimum payment is made every month. ​d. the account is a revolving credit account. e. ​the account balance is below the credit limit.

a. ​the account balance is paid in full every month.

Which of the following is true about credit scoring systems? a. Lower scores are better than higher scores. b. ​Scoring systems are based on statistical studies. ​c. Credit unions calculate and sell credit scores to lenders. ​d. Females receive higher scores than males. e. ​Stronger the personal traits of a person, lower will be his credit score.

b. ​Scoring systems are based on statistical studies.

Interest will usually begin to accrue immediately when you use a bank credit card to: a. ​make purchases. ​b. send payments. ​c. compute finance charges. ​d. get cash advances. e. meet a financial emergency.

d. get cash advances.

Which of the following modes of identity theft involves thieves obtaining your personal information from financial institutions and other sources under false pretenses? a. ​Dumpster diving b. ​Skimming ​c. Phishing d. ​Pretexting e. ​Old-fashioned stealing

d. ​Pretexting

If the information on your credit report is in dispute, you are entitled to: a. ​correct it. b. ​sue. c. ​erase it. d. ​provide your own explanation about the dispute. ​e. withdraw from the credit bureau.

d. ​provide your own explanation about the dispute.

Which of the following is an appropriate reason for using a credit card? a. ​Purchase of food b. ​Payment of utility bills c. ​Payment of small cash outlays d. ​Impulse purchases e. ​Shopping convenience

e. ​Shopping convenience

As a percent of take-home pay, monthly consumer credit payments should not exceed _____. a. ​25% ​b. 20% c. ​15% ​d. 10% e. ​5%

​b. 20%

Which of the following is an improper use of credit? a. ​Buying a home ​b. Buying a short-lived service c. ​Spreading payments within a budget d. ​Purchasing a big-ticket item ​e. Meeting a financial emergency

​b. Buying a short-lived service

Which of the following will lead to poor credit rating? a. Opening checking and savings accounts ​b. Opening and using a charge account ​c. Applying for a long-term loan and occasionally being late with a payment ​d. Making payments ahead of scheduled time ​e. Discussing with the lender if you foresee difficulty in making a payment

​c. Applying for a long-term loan and occasionally being late with a payment

Sheldon has a home valued at $108,000 with an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of the market value, how much can Sheldon borrow using a home equity loan? ​a. $86,400 b. ​$80,000 c. ​$38,000 ​d. $30,400 ​e. $16,400

​e. $16,400

Chapter 7 bankruptcy will: a. ​restore all the losses incurred by the borrower. b. ​result in the loss of all of one's assets. ​c. require the debtor to pay back the debt in the future. d. ​sell only the home of the borrower. ​e. eliminate most of the financial obligations of the borrower.

​e. eliminate most of the financial obligations of the borrower.


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