FoolProof pt 1

Most businesses only tell you the good things about their product or service. Your job is to buy a product or service based on what a business says.

False.

Which one of the following statements about risk-based financing is FALSE?

Risk-based financing is illegal and cannot be used by companies.

After obtaining bad credit there is no easy fix to get good credit other than building back up through years of paying your bills on time every month and decreasing your debt-to-income ratio.

True.

Credit is an arrangement for you to pay at a later date. It is one way to determine trustworthiness.

True.

Many companies always look out for the consumer and give them repayment plans that can be paid off in the shortest amount of time possible.

False.

With bad credit you are more dependent on others. Which statement is correct?

Bad credit means you may have to live at home with your parents for a long time. It also means you may have trouble getting a good job, and trouble getting a loan. And even if you get a loan, you will pay a lot more in interest.

Why do companies check your credit rating?

Because many companies believe your credit history lets them know if you would be a good or bad employee.

If you are renting an apartment with a roommate and all of the utilities are in your roommate's name why would your payments not help or hurt your credit rating?

Because unless my name is on the account the credit bureaus do not recognize the payments.

Select the one statement that accurately describes credit bureaus (also called "credit reporting agencies").

Credit bureaus keep records of your spending habits for seven to ten years.

You owe $1,000 on a credit card and choose to pay the minimum payment each month. Which answer is correct?

Credit card companies love you when you only make minimum payments! Why? You're throwing your money away by paying extra interest each month.

Do many companies like it when you look like a fool?

Definitely! The job of many companies is to make money, not to do what is right for you... If you look like a fool, they make more money.

What is FoolProof's definition of "looking like a fool"?

Falling for anything which makes companies and other people think you're too stupid or too young to know better.

Most online financial institutions and businesses will regularly send you emails asking you to update your account information by going to a link in their emails.

False

Native advertisers are required to show all sides of an issue in articles they publish.

False

A "credit score" is a three-digit number which rates how much a company likes you personally.

False.

How long you've had an account - like a credit card or a cell phone account - has nothing to do with determining your credit score.

False.

If you mail in your credit card payment on the day it is due, it is not late.

False.

It will always take at least seven years to rebuild bad credit into good credit.

False.

Which answer applies to "fine print"?

Fine print is usually where virtually all the important information is located.

Which statement best illustrates how good credit can give you power?

Having good credit can lead to a better paying job and better interest rates on a loan, for a car, a home, etc.

Vinnie (our friend in the video) had many credit cards, and he did have fun with them! Then he nearly went broke. What was the main thing Vinnie did wrong?

He used one credit card to pay other credit card bills.

What is a "debt-to-income" ratio?

How much money you owe in total versus how much you make.

Native advertising can include all of the following except:

Independent journalists

Why should you do research beyond an article you read?

It may be native advertising. To learn about alternative solutions. The source of the article may not be impartial.

Which statement is true about risk-based financing?

Risk-based financing is a way that lenders determine your interest rate for a loan based on how likely you are to repay that loan.

What is the best way to hurt your credit rating?

Make all your payments early except your credit cards. It's OK to pay them late.

You owe $1,000 on a credit card and choose to pay the minimum payment each month. Which answer is correct?

Making minimum payments means it could take thirty or forty years to pay off that $1,000 credit card bill.

Which answer applies to "fine print"?

Many companies like fine print because you can be confused by it, and make the wrong decision.

You add your sister to your cell phone plan and she runs up your bill. Whose credit will be hurt if the bill is not paid?

Mine - I am always responsible for my accounts.

What answer best describes a Nigerian scam?

Nigerian scammers nearly always want you to send money back to them.

The business that gives you a loan or rents you an apartment is the one in charge of your credit record and credit score.

No, I am in charge of my credit history.

What statement is TRUE about "phishing scams"?

Phishing scams cannot hurt you if you do not respond to them.

Your credit score says most companies will loan you money at ten percent interest. A company agrees to loan you money at twenty percent interest. This is an example of what?

Predatory Lending.

Because your credit rating is low, a company charges you more interest on a loan. But the interest rate is not directly related to your credit. This company charges you as much as it can, simply because they think you have no other choices. This is a definition of:

Predatory lending.

Which statement is true?

Since my credit score is going to impact my freedom, my job, and my goodie collection, I should start thinking about my credit score now.

Which of the following things will affect your credit score?

Skipping payments on your cell phone account Paying your bills on time Paying your bills late

Which of these people has "bad credit"?

Tamara's parents co-signed a car loan for her new wheels. Her monthly payment is due by the 15th of each month. So far she has made the payment each month. But on three months, she sent her payment after the due date on the coupon because she had not yet received her bi-weekly paycheck from her part-time job. On more than one occasion she was more than 30 days late.

You own a credit bureau. You're trying to decide which person is the better credit risk. Which statement/person would you choose as the better credit risk?

Ted is just about to pay off his 36-month loan on his used RAV4. He's made 35 monthly payments on time to his credit union and is sending the 36th payment in on time, too.

Which of the following statements is TRUE?

The credit history of borrowers is shared with other financial institutions. This means all lenders are likely to know of any payments that you have missed.

Having a bad credit history impacts every one of these items but one. Which is the one item not impacted by bad credit history?

The fact that I am a good person.

Which answer applies to "fine print"?

The fine print can say the opposite of the big print.

Your credit score rules your life - that's reality. Which of these statements is an example of that reality?

The higher your credit score, the higher chance you have of qualifying for a loan.

You mailed in your credit card payment late but when you wrote the check you dated it for January 13th even though the due date is the 15th. Which statement is true?

The payment is still late because the payment was not received by the due date.

What is the best explanation of "debt-to-income" ratio?

The ratio of how much money individuals owe in relation to how much money they make.

Good credit is the key to financial freedom.

True

What can you look for to tell you that an article is native advertising?

Words like "custom content".

Good credit gives you options. Bad credit takes away your options. Choose the one correct answer.

You have good credit. You can choose the credit card with the lowest interest rate.

Which answer applies to "fine print"?

You should always read the fine print.

If you mismanage your checking account by bouncing checks repeatedly or ignoring overdraft notices, which of the following results may happen to you? [Tricky question: read all answers.]

You will be charged a penalty fee for a "returned" (bounced) check. If you aren't aware of your "negative balance" and don't put more funds in your account you bounce more checks and receive more penalty fees. You may pay higher rents or interest rates because of your poor credit history.

The more times your credit is checked when applying for credit cards or loans will help build your credit rating.

False.

Which statement gives the best definition of financial credit?

Financial credit is an arrangement for you to pay at a later date. Loans and credit cards are forms of credit. Financial credit is also a way that lenders, businesses, and potential employers determine whether someone is trustworthy.

Which statement is true?

Your credit history and your credit score hold the key to your financial future.

Which of the following statements about your credit report is most accurate?

Your credit report can be checked once a year for free at the major credit reporting agencies.

Which statement is true?

Your credit score is based on your payment history.