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
