Personal Finance (6.01-6.04)

Jake’s credit application has been declined because of his negative credit history. Which is most likely to be true?

• Jake pays his bills consistently and on time.

• Jake has applied for 4 credit cards and a car loan in the past 6 weeks.

• Jake has received 3 traffic tickets in the past 2 months.

• Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage.

Which is not an example of a data furnisher?

• Landlord

• Credit card company

• Utility company

• Medical provider

When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which best describes what this is likely to mean for Bryce?

• The interest rates on his loan will be lower, since his credit score is low.

• The purchase price of the item he needs the loan for will be higher due to his low credit score.

• The monthly loan payments will be lower due to his lower credit score.

• The interest rates on his loan will be higher, since his credit score is low.

Edward wants to develop a positive credit history. How should he do this?

• Maintain reasonable amounts of available credit

• Have one type of credit account

• Pay cash for the majority of purchases

• Open credit accounts in his parents’ names

Jenny is 18 years old and has applied for credit for the first time. Her credit application was declined because she has no credit history. What should be recommended in order for Jenny to build a positive credit history?

• Jenny should acquire several credit cards to establish that she can manage them responsibly.

• Jenny should obtain a secured credit card.

• Jenny should reapply for the same credit but include a letter of recommendation from someone who knows her well and can vouch for her character.

• Jenny should apply for a different type of credit. Since she was applying for a bank loan, she should apply for a credit card.

Becky no longer wants to use her Clothes-R-Us store credit card. What is the best thing she could do with the credit card?

• File the credit card away for use at a later time.

• Let a family member take over the credit account so her credit score will not be affected.

• Keep the credit card in her wallet in case she needs proof of identification.

• Close the account by phone and in writing, then destroy the card.

Which is not included in an individual’s credit report?

• Current and past addresses

• Account balances

• Account balances

• Medical information

When may a person view his/her credit report for free?

• At any time and an unlimited number of times

• Once a year, from each of the three main credit reporting agencies

• A person may not review his/her credit report

• When a person has sufficient financial resources

David earns $5,000 per month at his accounting job. He has a student loan payment of $120, a car loan of $300. Which statement is true?

• David’s total credit payments are higher than the recommended amount for someone earning his income.

• David’s student loan payment must be subtracted from his car loan payment to determine whether his overall credit payments are within the safe range.

• David’s student loan payment is within the safe range but his car loan is not.

• David’s credit payments are within the safe range for someone with his income.

The financial counselor that Ariel consulted about her use of credit recommended that she keep her use of credit within safe boundaries. Ariel’s financial counselor most likely told her to:

• keep the total amount of money she has borrowed, including her mortgage and her car loan, under 20% of her net income.

• keep the total amount of money she has borrowed, including her mortgage and her car loan, under 40% of her net income.

• keep the total amount of money she has borrowed, not including her house, under 20% of her net income.

• keep the total amount of money she has borrowed, not including her house, under 40% of her net income.