Personal Finance Ch 5

consumer applies for open-end credit to make a single purchase such as a large appliance

false

consumer credit refers to the use of debit cards for personal needs

false

during the grace period, finance charges are assessed at only half the normal rate

false

the higher your FICO score, the more risk you pose to creditors

false

the longer it takes for you to pay off a bill, the less interest you pay

false

typically credit use is not a contributing factor to living beyond your means

false

if you miss payments on a home equity loan, you can lose your ___________

house

the maximum dollar amount of credit the lender has made available to a buyer

line of credit

if you are a cosigner for a loan and the debt is not repaid, that fact will appear on your credit report.

true

if you purchase something with a credit card, the finance charges you pay on an item could end up being more than the item is worth

true

in the five C's of credit, character refers to the borrower's trustworthiness and stability

true

most information in your credit file (except bankruptcies) may be reported for only 7 years

true

the longer the term for a loan at a given interest rate, the greater the amount you must pay in interest charges

true

Which of the following is NOT one of the three major credit bureaus?

FICO

electronically subtracts money from your savings or checking account to pay for goods and services

a debit card

Which of the following is an example of open-end credit?

a department store credit card

perhaps the greatest disadvantage of using credit is ___________________

the temptation to overspend

FICO scores are used by creditors to predict how likely it is that you will repay a loan.

true

a credit card holder who pays the full balance during the grace period each month is actually getting a free loan from the credit card company

true

only online source authorized to provide you with a free copy of your credit report annually?

www.annualcreditreport.com

If you are denied credit, __________________________

you are entitled to a free copy of your credit report

which of the following is ofen the first sign of a stolen identity

you receive bills for a credit card account you never opened

FICO scores generally range from

350-850

example of closed-end credit

a mortgage loan

before taking out a loan, you should ask yourself where you can meet all your essential expenses and still afford the monthly loan payments. This can be determined by _____________________

adding up basic monthly expenses and subtracting this total from take-home pay, plus figuring out what to give up to make the monthly loan payment

A disadvantage of using credit is the convenience it offers when making a hotel reservation or renting a car.

false

Which of the following is NOT a valid reason for borrowing?

paying for everyday living expenses

A cash advance ________________________

required you to pay interest every day until you repay the cash advance