Chapter 8: Credit Records and Law

Credit bureaus are permitted to charge a reasonable fee for freezing or unfreezing a consumer's credit reports and files.

True

Simon pays his bills on the due date or within a ten-day grace period. This would probably earn him a(n)

good credit rating

Your credit_________________is the complete record of your borrowing and repayment performance

history

When a credit bureau adds up your credit points, they result in a credit________________________.

score

Credit bureaus gather information from businesses, called _____, that pay a monthly fee to the credit bureau.

subscribers

This law requires lenders to fully inform consumers about all costs of a credit purchase before an agreement is signed

the Consumer Credit Protection Act

On a FICO score, new credit is rated based on

the number of recently opened accounts and the number of recent credit inquiries

Donna's assets are $4,500; her liabilities are $1,750. Find Donna's capital.

$2,750

Tyler hires a credit guard service to monitor his credit files. He pays a $100 fee to subscribe to the service, plus a $25 monthly fee. He can request one free copy of his credit report each year; additional copies are $10 each. In the first year, Tyler requested three copies of his credit report. What was the total amount of fees Tyler paid the credit guard service during the first year?

$420

Cameron takes out a six-month loan at his bank for $500. The annual interest rate for the loan is 8 percent. If Cameron pays back the loan as agreed, what is the total amount (principal plus interest) he will pay the bank?

$520

Mia takes out a 12-month loan at her credit union for $750, payable in 12 equal monthly installments of $67.50. If Mia makes all required monthly payments, how much interest did she pay on the loan?

$60

A local furniture store hires Vinnie's Creditor Services to collect a debt from Alice, who has stopped making payments on bedroom furniture she purchased several months ago. Alice still owes the store $1,500. If Vinnie collects the debt, his fee will be 40 percent of the amount collected. How much will Vinnie earn if he collects the entire debt from Alice?

$600

The Consumer Financial Protection Bureau was created by the

Dodd-Frank Wall Street Reform and Consumer Protection Act

Any negative information that could harm your ability to get credit remains in your credit report for 10 years.

False

Collateral refers to financial assets you possess that are worth more than your debts.

False

Once credit is established, most people should plan on having at least eight to ten credit cards at any given time.

False

The Fair Credit Billing Act prohibits creditors from denying credit to someone based solely on marital status.

False

When a bill is paid within 15 days of its due date, this is considered an automatic grace period.

False

When you are denied credit, you can obtain a credit report for $15 if you ask within 30 days of being denied.

False

Before granting you credit, a creditor will check into your past credit performance.

True

Businesses can make credit inquiries on you without your permission, but usually those inquiries do not count toward your credit score.

True

If the economy is slowing and unemployment in your area is rising, creditors may be less willing to grant you a loan.

True

If you hire a credit guard service company, you will be notified whenever anyone accesses your credit file for any reason.

True

Some banks allow minors to establish savings accounts with small balances and waive normal fees charged to other depositors.

True

The Account Detail section of a credit report shows the monthly balances for all of a consumer's credit accounts as well as credit limits on each account.

True

The fee charged by a debt collector is often about half of the amount collected.

True

The two major factors used to evaluate consumers' creditworthiness are credit rating and credit score.

True

Which of the following might be included in your credit report?

all of the above can be included in your credit report

The financial ability to repay a loan with present income is known as

capacity

A responsible attitude toward honoring obligations is called________________________.

character

Property pledged to assure repayment of a loan is called____________

collateral

A(n)____________________________is someone who promises to pay if the borrower fails to pay.

cosigner

Credit reports are issued by

credit bureaus

A consumer request that requires the credit bureaus to deny all access to a consumer's credit information or files is called a

credit freeze

A(n)____________________________is a person or company hired by a creditor to collect the overdue balance on an account.

debt collector

_______________________is treating people differently based on prejudice rather than individual merit.

discrimination

A(n)___________________credit rating is earned by a customer who usually pays all bills within the grace period, but occasionally takes longer.

fair

Which of the following is often the first step people take to establish a good credit record?

open a savings account

Your credit____________________is a measure of creditworthiness based on an analysis of your credit and financial history.

rating

A credit________________is a written statement of a consumer's credit history.

report