Personal Fiance chp 6

What tells the creditor how likely a potential customer will pay back a loan if given to them?

credit score

A good or average credit score would be considered 650.

false

Failure to repay loans has a minimal affect on your credit score.

false

Clark Griswold bought a new flat screen TV at Best Buy with his Discover Card on March 8. Clark's bill for the Discover card does not come in the mail until March 25. What is the time called between March 8 and March 25?

grace period

Which of the following things will help a person's credit score?

length in time of having a credit card

If Fred is having a hard time getting a loan from a bank. Which of the following should Fred not to in order to increase his chances of getting this loan?

open up another credit card

Which of the following is NOT one of the three steps to establishing and building a credit history?

pay with your debit card regularly

A high interest rate for a loan would be considered 13%

true

Companies offering open-end credit arrangements bill their customers periodically for partial payment

true

If you get a loan from a credit union that would be considered a medium priced loan.

true

The Universal Default clause in a credit card agreement allows a credit card company to automatically increase the interest rate of a cardholder due to their delinquency on payments elsewhere.

true

There is no limit on the interest rates that credit card companies may charge individuals.

true

Morris Buttermaker applied for an automobile loan to purchase a Ford Fusion. However, his loan officer informed him that Ford Motor Credit could not offer him their lowest loan rate due to his low credit score. Therefore, Morris decided to postpone his purchase of the car until he could significantly raise his score. Which of the following things will not increase Morris's credit score?

use the full amount of credit given

The manufacturing company for which Amanda Whurlitzer works recently laid off twenty percent of its workforce to due poor consumer demand for its products. Fortunately, Amanda was able to remain employed. However, she was forced to accept a fifteen percent pay decrease at a time when her personal budget is already tight. Based on the scenario provided, Amanda would most likely be denied credit from a lender based on which of the following factors?

Capacity

Upon compiling his personal balance sheet, Regi Tower realizes that he has $275,000 in assets and only $220,000 in liabilities. Hence, his assets exceed his liabilities by $55,000. What term best describes this leftover amount, the product of your assets exceed your liabilities?

Capital

Which of the following institutions is NOT an example of a typical source of consumer credit?

Edward Jones Investments

Name two of the three credit bureaus that pull can your credit report.

Experian, Trans Union, Equifax

What corporation developed and currently produces FICO scores?

Fair Issac

A FICO score of 480 typically indicates a borrower with high creditworthiness

False

Offering smaller down payment on loans typically lowers the interest rate for borrowers.

False

Correct Calvin LaLoosh recently opened a credit card account with Discover. According to his cardholder agreement, Calvin may borrow up to $1,000 using his credit card. What term best describes this maximum amount of money that Discover will allow him to borrow?

Line of credit

Which of the followings scenarios will cause a borrower to pay a higher total loan amount over the course of the loan?

Scenario B

Which of the following is NOT information typically included in the credit file of a potential borrower?

Total Assets

Credit bureaus make money by selling information they collect to creditors considering loan applications

True

Pledging collateral typically reduces the risk to lenders and allows them to offer a lower interest rate to borrowers.

True

The Equal Credit Opportunity Act states that a lender cannot discriminate against a borrower based on race, age, or sex.

True

Which of the following creditors typically offers an open-end credit arrangement?

Visa

Tanner Boyle recently obtained a 30-year mortgage loan in the amount of $280,000 for the purchase of a new townhouse. According to the disclosure of terms by his lender, Big Bear Mortgage Company, Tanner will pay $324,347 in finance charges over the 30-year period of his loan. His loan officer informs him that the cost of his credit, on a yearly basis, will be 6%. What term best describes the cost of credit on a yearly basis, expressed as a percentage?

APR

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

allows individuals to combine multiple purchases into one monthly payments

Roy Turner has been employed at six different jobs in the past four years and was recently arrested for tax fraud. Based on the scenario provided, Roy would most likely be denied credit from a lender based on which of the following factors?

character

Joe Riggins recently purchased a new ranch-style home. In purchasing his new home, Joe borrowed $275,000 from United Mortgage Company with the agreement to pay the loan in equal monthly installments over the next thirty years. What term best describes the type of credit offered by United Mortgage Company?

closed-end credit