Question 1

When did installment credit explode on the American scene?

Accepted Answer

A)  With the advent of the automobile in the early 1900s
B)  With the advent of television in the late 1940s
C)  Just after World War II
D)  During the recession of the 1950s
E)  During the inflation of the 1970sF) C) and D)
G) B) and E)

Question 2

Dave's net take-home pay per month is $2,200.What is the maximum dollar amount of debt payments,excluding a home mortgage,he should have?

Accepted Answer

A)  $880
B)  $440
C)  $330
D)  $220
E)  $0F) B) and C)
G) A) and C)

Question 3

One example of closed-end credit is:

Accepted Answer

A)  a credit card issued by a department store.
B)  a credit card issued by VISA or MasterCard.
C)  the use of overdraft protection at a bank.
D)  the use of a cashier's check to pay for a purchase.
E)  a mortgage loan.F) C) and D)
G) B) and C)

Question 4

Which federal credit law sets the procedure for promptly correcting billing mistakes?

Accepted Answer

A)  Fair Debt Collection Practices Act
B)  Equal Credit Opportunity Act
C)  Fair Credit Billing Act
D)  Fair Credit Reporting Act
E)  Truth in Lending ActF) None of the above
G) A) and E)

Question 5

If you are a woman,a creditor must:

Accepted Answer

A)  require a spouse to cosign a loan.
B)  ask about your birth control practices or family plans.
C)  consider whether you have a telephone listing in your own home.
D)  refuse individual credit in your own name.
E)  consider income from your employment.F) A) and B)
G) A) and C)

Question 6

In the 5 Cs of credit,capacity refers to the borrower's financial ability to meet credit obligations.

Accepted Answer

A) True 
 B)False

Question 7

If you are denied credit,your first step should be to:

Accepted Answer

A)  increase your income and decrease your spending.
B)  reapply for credit.
C)  hire an attorney and file a suit against the creditor.
D)  check your credit file at the credit bureau.
E)  sue the credit bureau that provided the negative information.F) A) and B)
G) B) and E)

Question 8

The larger the debt-to-equity ratio,the riskier the situation is for lenders and borrowers.

Accepted Answer

A) True 
 B)False

Question 9

Which federal consumer credit law prohibits credit card issuers from sending unrequested cards?

Accepted Answer

A)  Truth in Lending Act
B)  Fair Credit Reporting Act
C)  Fair Credit Billing Act
D)  Equal Credit Opportunity Act
E)  Fair Debt Collection Practices ActF) B) and D)
G) All of the above

Question 10

Consumer credit:

Accepted Answer

A)  is a privilege of the affluent.
B)  dates back to colonial times.
C)  carries no finance charge.
D)  is not a major force in our economy.
E)  use has been declining in recent years.F) B) and D)
G) A) and D)

Question 11

Most of the information in your credit file may be reported for only seven years.However,if you have declared personal bankruptcy,then this fact may be reported for 10 years.

Accepted Answer

A) True 
 B)False

Question 12

Paul Phillips has checked his credit report and believes there is an error in it.Which consumer protection law specifies that he has the right to have errors in his credit report investigated?

Accepted Answer

A)  Fair Credit Reporting Act
B)  Fair Credit Billing Act
C)  Equal Credit Opportunity Act
D)  Fair Debt Collection Practices Act
E)  Truth in Lending ActF) None of the above
G) B) and E)

Question 13

When you cosign a loan,you are being asked to guarantee this debt.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following is important to do to help avoid credit card fraud?

Accepted Answer

A)  Sign your card as soon as you get it
B)  Give out your credit card number over the phone
C)  Write your credit card number on the outside of envelopes
D)  Leave your credit card lying around anywhere
E)  If your billing statement is incorrect, ignore itF) B) and D)
G) A) and B)

Question 15

The borrower's financial ability to meet credit obligations is called:

Accepted Answer

A)  capacity.
B)  character.
C)  capital.
D)  collateral.
E)  conditions.F) A) and B)
G) C) and D)

Question 16

Which one of the following is a disadvantage of using credit?

Accepted Answer

A)  Receiving advance notice of sales
B)  Temptation to overspend
C)  Avoiding the necessity of carrying cash
D)  Ease of returning merchandise
E)  Having a record of all purchasesF) B) and E)
G) None of the above

Question 17

The Fair Credit Billing Act has a provision in which a lender can threaten your credit rating while you are resolving a billing dispute.

Accepted Answer

A) True 
 B)False

Question 18

Although credit allows more immediate satisfaction of needs and desires,it does not increase total purchasing power.

Accepted Answer

A) True 
 B)False

Question 19

If you have incorrect information in your credit file:

Accepted Answer

A)  you can't really do much about it.
B)  you have no legal remedies.
C)  credit bureaus are not required to change it.
D)  there are legal remedies available to you.
E)  don't worry because it will not affect your ability to borrow money.F) None of the above
G) A) and B)

Question 20

When imposters take your name,they are committing a crime.

Accepted Answer

A) True 
 B)False

Exam 6: Introduction to Consumer Credit

Although credit allows more immediate satisfaction of needs and desires,it does not increase total purchasing power.

Correct AnswerverifiedShow Answer

When imposters take your name,they are committing a crime.

Correct AnswerverifiedShow Answer

Most of the information in your credit file may be reported for only seven years.However,if you have declared personal bankruptcy,then this fact may be reported for 10 years.

Correct AnswerverifiedShow Answer

If you have incorrect information in your credit file:

Correct AnswerverifiedShow Answer

Which one of the following is a disadvantage of using credit?

Correct AnswerverifiedShow Answer

Consumer credit:

Correct AnswerverifiedShow Answer

The Fair Credit Billing Act has a provision in which a lender can threaten your credit rating while you are resolving a billing dispute.

Correct AnswerverifiedShow Answer

If you are denied credit,your first step should be to:

Correct AnswerverifiedShow Answer

In the 5 Cs of credit,capacity refers to the borrower's financial ability to meet credit obligations.

Correct AnswerverifiedShow Answer

Which federal consumer credit law prohibits credit card issuers from sending unrequested cards?

Correct AnswerverifiedShow Answer

Which one of the following is important to do to help avoid credit card fraud?

Correct AnswerverifiedShow Answer

The borrower's financial ability to meet credit obligations is called:

Correct AnswerverifiedShow Answer

When you cosign a loan,you are being asked to guarantee this debt.

Correct AnswerverifiedShow Answer

Paul Phillips has checked his credit report and believes there is an error in it.Which consumer protection law specifies that he has the right to have errors in his credit report investigated?

Correct AnswerverifiedShow Answer

The larger the debt-to-equity ratio,the riskier the situation is for lenders and borrowers.

Correct AnswerverifiedShow Answer

Dave's net take-home pay per month is $2,200.What is the maximum dollar amount of debt payments,excluding a home mortgage,he should have?

Correct AnswerverifiedShow Answer

If you are a woman,a creditor must:

Correct AnswerverifiedShow Answer

One example of closed-end credit is:

Correct AnswerverifiedShow Answer

When did installment credit explode on the American scene?

Correct AnswerverifiedShow Answer

Which federal credit law sets the procedure for promptly correcting billing mistakes?

Correct AnswerverifiedShow Answer

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