2nd half study guide

Which of the following statements is CORRECT about secured loans?

• They are a good choice to use for student loans

• If the borrower does not make payments, the lender can repossess the item

• In the event of default, the borrower loses nothing except for the down payment

• They usually have higher interest rates as compared with unsecured loans

Amy and Chuck each buy a house in the same neighborhood for $250,000. Amy's monthly mortgage payment is $400 more per month than Chuck's. Which one of the following statements could explain this difference?

• Amy chose a shorter term for her mortgage, so her monthly payments are higher

• Amy made a larger down payment, so her monthly payments are also larger

• Chuck chose a shorter term for his mortgage, so his monthly payments are also lower

• Chuck has a lower credit score, so his interest payments are also lower

All of the following would show up on a credit report EXCEPT...

• Salary of your current job

• Payment history of your car loan

• Credit card payment history

• Student loan activity

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

• Cancel his credit cards

• Make on-time payments

• Get a car loan

• Check his credit score

Who tracks all of your credit information?

• Credit reporting agencies (Equifax, Experian and TransUnion)

• Federal government

• Consumer Financial Protection Board (CFPB)

• Lenders

Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?

• Paying your bills on-time

• Paying down balances on your credit card accounts

• Decreasing your utilization of credit

• Applying for multiple credit cards

Which of these represents a potential consequence of neglecting to pay your federal student loans?

• Wages or tax refunds can be garnished

• Passport revocation

• Driver’s license suspension

• Termination from your job

How can your credit score impact your financial well-being?

• Only consumers with high scores are approved for credit

• Consumers with low scores get lower interest rates on loans than those with high scores

• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be

• It generally has no impact on your financial situation

What is an insurance premium?

• Your monthly payment to your insurer, regardless of whether you use any services

• A list of the procedures covered by your insurance carrier

• An added cost you pay in order to receive higher-quality services

• The amount you pay out-of-pocket for a specific procedure or service

Insurance companies make money by...

• Refusing to pay out claims to policyholders

• Collecting money from the government

• Collecting more in premiums than they need to pay out each year

• Keeping costs low with minimal advertising