DO NOT WRITE ON TEST BOOKLET!
Con Ed _Chapter 6 Test_Fall 2013
1. A mortgage is an example of a closed-end credit.
T.
True
F.
False
2. You are responsible to provide [give] proof [evidence] that disputed [incorrect] information on your credit report is
in[not]accurate.
T. True
F.
False
3. An example of open-end credit is a(n)___.
A.
B.
automobile loan
C.
installment loan
D.
credit card charge
4. The interest is tax deductible [you can take it off of your tax forms] on a ___.
A. bank loan
B.
C.
home equity loan
D.
credit card loan
5. Credit card holders are known as [called] convenience users when they ___.
A. pay off their balances each month
B.
carry [keep] balances beyond the grace period [after the bill comes]
C.
D.
carry smart cards
6. The total dollar amount you pay to use credit is the ___.
A. debt payment-to-income ratio
B.
finance charge
C.
D.
term of the loan
7. Which of the "five C's of credit" require [means] that a person's assets [money owned] exceed [is more than] his or her
liabilities [money owed]?
A. character
B.
capacity
C.
capital
D.
collateral
8. A credit bureau is required to [must] follow reasonable procedures [steps] to make sure that ___.
A. creditors extend credit to retirees [older people who no longer work]
B.
Eligible [possible] borrowers on public assistance [government gives help] receive [get] credit
C.
D.
the information in a person's file is correct
9. How should a card holder begin to correct a mistake on a credit card bill?
A. Stop payment on the creditor's check.
B.
Shred [cut up] papers that contain personal information.
C.
Notify the creditor in writing [by sending a letter].
D.
10. The Consumer Credit Counseling Service offers [gives] to ___.
A. erase legitimate debts that consumers owe [get rid of true debt]
B.
supervise debt repayment plans [watch over debt payback plans]
C.
D.
help debtors declare bankruptcy
11. A loan from a family member is an example of an expensive loan.
T. True
F.
False
12. In a Chapter 13 bankruptcy, the debtor [person who owes money] usually gets to ___.
A. keep most of his or her property
B.
C.
avoid [keep from] paying debts arising from [charged through] fraud.
D.
stop payments on educational [school] loans
13. ___ is a form [type] of security [property already owned] to help guarantee [show] that a creditor will be repaid [paid back].
A.
B.
car lease
C.
apartment
D.
collateral
14. ___ is the complete record of a person's borrowing.
A. open-end credit
B.
credit rating
C.
closed-end credit
D.
l
15. ___ is an entity (bank, finance company, credit union, business, or individual) to which money is owed.
A.
B.
payer
C.
creditor
D.
employer
16. You have decided to purchase [buy] a used car in the amount of $4,000. You [plan] with your financial institution [bank/credit
union] to make payments for 3 years with the simple interest rate at 7 percent. How much interest will you pay [by the end of
3 years]?
A.
B.
$840
C.
$21
D.
$120
17. What is your debt payments-to-income ratio if your debt [money you owe] payments total $485 and your net income [money
you earn] is $2,000 per month?
A. 9.68%
B.
24.2%
18. ___ is the ability [being able] to borrow money for a variety of goods [things] and services up to a limit set by the company
issuing [giving] the credit.
A. closed-end credit
B.
open-end credit
C.
credit rating
D.
19. ___ is a last resort [final] process [way] in which some or all of the assets [owned property] of a debtor are distributed [divided]
among creditors because the debtor is unable to [cannot] pay his or her debts.
A.
B.
credit counseling
C.
bankruptcy
D.
adjustment repayment
20. ___ is a business that collects debts [money] for creditors.
A.
debt collector/collection agency
B.
business collector
C.
D.
credit collector
21. ___ is a time period during which no finance charges [interest] are added to a credit card account.
A.
closed-end period
B.
open-end period
C.
D.
grace period
22. A secured loan is one guaranteed [expected] to be repaid [paid back] through safe collateral.
T. True
F.
False
23. Equifax is a credit bureau.
T. True
F.
False
24. When you cosign a loan for [sign for with] a friend, you may be responsible to make loan payments if the other person fails to
[does not pay].
T. True
F.
False
25. If you file for Chapter 7 Bankruptcy, you will have to sell most of your assets [owned property].
T. True
F.
False