BUSI 1307 Chapter 6 Quiz
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.
