Module 12
The FDIC covers up to _____ per depositor, per insured account (bank).
$250,000
commercial bank
A financial institution that accepts demand deposits and makes loans and provides other services for the public
Equal Credit Opportunity Act
A law that protects consumers from discrimination in the granting or denying of credit
credit union
A nonprofit financial institution that is owned by its members and organized for their benefit it offers higher interest rates on savings accounts and charges lower interest rates on loans than a traditional bank.
Which of the following makes up a monthly loan payment?
Both principal and interest payments
Getting a job.
Capacity
Putting earnings into a savings account.
Capacity
Getting a debit card and refraining from overdrawing the account.
Character
Your friend's credit score just seriously dropped, but he can't think of anything he might have done to cause it. What do you recommend he do?
Check his credit report. There might be a mistake that is hurting his credit score.
Listing the guitars that you own.
Collateral
Property that is pledged to repay a loan if monetary payment is impossible belongs in this category of the 5 C's.
Collateral
Secured Loan
Collateral is required, Can be repaired in equal monthly payments for as long as 45 years, collateral can be lost if the loan is not repaid.
Your friend is having trouble choosing between two loans with equal terms. What do you tell her?
Compare them by their APRs.
The biggest factor in determining your credit score is...
FICO
Your creditworthiness is measured by a number called a
FICO score
Which regulates consumer reporting agencies and the use of consumer credit information?
Fair Credit Reporting Act
Because of the ___________________, debt collectors cannot legally threaten you with physical harm while trying to collect a deb
Fair Debt Collection Practices Act (FDCPA)
Big banks always have much lower interest rates than online-only lenders and credit unions.
False
Your credit score depends on your income.
False
Deposits at Savings and loans are insured through the
Federal Deposit Insurance Corporation
FDIC stands for
Federal Deposit Insurance Corporation
If you can't raise your credit score in time and you still want to reap the benefits of excellent credit, what can you do?
Find someone with great credit willing to cosign your loan.
Your friend is trying to choose between two unsecured loans: one with a short term and one with a long term. What do you recommend to her?
Get the short-term loan (if you can afford it). It comes with a lower interest rate and less interest paid over the life of the loan.
_____ bankruptcy happens when creditors file a petition of bankruptcy against a debtor who owes them money.
Involuntary
NCUA stands for
National Credit Union Administration
Fair Debt Collection Practices Act
Prohibits unfair, abusive, and deception methods of collecting debt
Fair Credit Billing Act
Provides consumers with a means to dispute a billing error on open-ended credit accounts (credit and charge cards)
Your friend is choosing between an unsecured loan and a secured loan. What do you tell him?
Secured loans come with lower interest rates and approval rates, but the bank can take the financed asset (like a car) if you fail to repay
Unsecured loans
Sometimes has a higher interest rates because there is higher risk for the lenders.
What is true about interest rates?
The APR includes both the interest rate and the loan's fees.
What do you need to calculate your monthly loan payment?
The amount of money borrowed, the interest rate, The term
Foreclosures
The bank that holds your mortgage can take back your house if the mortgage is not paid according to schedule.
Which of these is a step involved in the credit counseling process?
The counselor communicates with creditors for the debtor. The counselor works to have fees waived on credit cards. The counselor helps set up a payment
A consumer who has excessive spending habits could end up filing for bankruptcy.
True
A credit report is a detailed history of your credit, covering everything from your payment history to the age and status of your accounts.
True
Credit cards from retailers generally have higher interest rates than credit cards from banks.
True
If you have bad credit, it may be harder to get security clearance to do certain important jobs.
True
If you have good credit, it may be easier to get a job.
True
If you have multiple loans and credit cards, you should start paying off early the debt with the highest interest rate first.
True
Insurance companies may charge lower premiums to people with good credit.
True
People with bad credit often pay higher interest rates on credit card loans.
True
You can receive three free credit reports each year.
True
Bankruptcies are usually named after the chapter in which they appear in the...
US Bankruptcy Code, Title 11.
Evictions
When a renter fails to pay the rent and the landlord has them removed from the property.
Repossessions
You fail to make payments, so the seller of the item can take the goods back from you.
Liens
You owe a debt that has not been paid. Your property can taken away from you or you can be prevented from selling your property.
To get a decent loan, you'll need...
a credit score above 640 and a monthly debt-to-income ratio of below 36%.
FDIC
an agency developed by the federal government to regulate banking and and investment activities
If a bank fails, funds up to the coverage amount will be transferred to _____, or the depositor will receive a check.
another FDIC bank
Bankruptcy is the last option for consumers to consider when they
are in serious financial trouble.
CARD Act
bans unfair rate increases and unfair fees. The act also requires that credit card contract terms be presented to consumers in clear language and ensures accountability from credit card issuers and regulators.
A _____ is normally insured by the FDIC.
commercial bank
Credit bureaus get up-to-date information about a consumer's credit from a consumer's...
credit card applications.
An individual with a good ? will have access to lower insurance premiums, potential for better job opportunities, and lower interest rates on loans.
credit rating
A _____ is owned by its members.
credit union
A _____ is regulated by the NCUA.
credit union
A _____ usually offers higher interest rates on savings accounts.
credit union
Financial institutions include
credit unions, commercial banks, savings and loans, finance corporations, as well as insuring agencies and non-bank institutions.
Bankruptcy stays on your credit report for only two years.
false
The FDIC covers safe deposit boxes.
false
The three main credit bureaus are Experience, Equifax, and TransUnion.
false
payday loan
high-fee, short-term loan repaid when borrower receives income from work
tittle loan
high-interest loan in which borrower signs over title to their automobile
Car loans are examples of...?
installment closed end credit
Credit Union
institution where members can get lower-rate loans
NCUA
insures and regulates federal credit unions. So, the deposits of credit union members are insured—just as the FDIC insures banks.
savings and loan
is a bank that specializes in savings deposits from consumers and in making mortgage loans to homebuyers. Savings and loans are also called S & L's, thrift banks, savings banks, and even savings institutions.
The length of a person's credit history.
is factored into the FICO score.
An assessment of creditworthiness.
is known as a credit rating.
The number that evaluates creditworthiness.
is known as a credit score.
Pawn shop
loan based on the worth of the item used as collateral; item returned if the loan is paid off
Credit bureaus store credit report information and sell credit reports to...
loan lenders
Bank
makes many types of loans easily available but requires good credit
If your credit score is 825, you most likely will...If your credit score is 825, you most likely will...
pay a lower interest rate on a car loan
Equifax, Experian, and TransUnion.
perform credit ratings.
Fair Credit Reporting Act
regulates consumer reporting agencies and the use of consumer credit information.
The FDIC provides coverage for checking accounts and for...
savings
Chapter 13 bankruptcy has a budget devised and approved by...
the court.
The biggest factor in determining your credit score is...
your payment history
