Question 1

If you think that your bill is wrong, you should first

Accepted Answer

A)   contact the local credit bureau and inform it of the billing error.
B)   complain to the Better Business Bureau.
C)   contact your provincial consumer protection agency.
D)   notify the creditor of the error.
E)   contact your attorney to settle the matter.F) None of the above
G) A) and B)

Question 2

Cobranding is the linking of a credit card with a business trade name offering "points" or premiums toward the purchase of a product or service.

Accepted Answer

A) True 
 B)False

Question 3

The best way to maintain your credit rating is to

Accepted Answer

A)   use credit sparingly.
B)   pay cash for your purchases.
C)   repay your debts on time.
D)   declare a Chapter 7 bankruptcy.
E)   use as many credit cards as you can.F) All of the above
G) C) and D)

Question 4

The best way to maintain your credit standing is to:

Accepted Answer

A)   carry no credit cards
B)   pay all credit card invoices within 120 days
C)   repay your debts on time
D)   cancel any cars with outstanding balances
E)   if the balance is high and you cannot pay, claim your card was lost and misused by a 3rd partyF) A) and C)
G) A) and B)

Question 5

Generally, most of the information in your credit file may be reported for only ______ years.

Accepted Answer

A)   1
B)   3
C)   7
D)   9
E)   12F) A) and B)
G) All of the above

Question 6

Which of the following is the best rating to have on your credit report?

Accepted Answer

A)   L0
B)   L10
C)   R0
D)   R1
E)   R9F) A) and D)
G) C) and E)

Question 7

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Accepted Answer

A) True 
 B)False

Question 8

Most consumers have only one choice in financing current purchases.

Accepted Answer

A) True 
 B)False

Question 9

What percentage of credit card users generally pay off their balance in full every month?

Accepted Answer

A)   20%
B)   30%
C)   50%
D)   70%
E)   more than 80%F) A) and D)
G) C) and E)

Question 10

A common example of a consumer loan is:

Accepted Answer

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

Question 11

Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:

Accepted Answer

A)   a line of credit.
B)   convenience credit.
C)   revolving credit.
D)   installment credit.
E)   bank card credit.F) A) and B)
G) A) and C)

Question 12

If your monthly net (after-tax)  income is $2,000, what should be your maximum amount spent on credit payments?

Accepted Answer

A)   $200
B)   $300
C)   $400
D)   $500
E)   $600F) C) and E)
G) C) and D)

Question 13

Which of these is not a characteristic of Paypal?

Accepted Answer

A)   Facilitates online auction payments.
B)   Offers password protected accounts.
C)   Allows use of credit cards.
D)   Transfers funds in U.S. dollars.
E)   No annual fees.F) D) and E)
G) A) and C)

Question 14

Debt-to-equity ratio is

Accepted Answer

A)   a useless ratio for determining your credit capacity.
B)   calculated by dividing monthly debt payments by net monthly income.
C)   determined by dividing your assets by liabilities.
D)   calculated by dividing total liabilities by net worth.
E)   rarely used by creditors in determining credit worthiness.F) C) and E)
G) A) and B)

Question 15

If your credit application is denied, you

Accepted Answer

A)   can sue the credit rating agency.
B)   can file a complaint against the merchant.
C)   don't have any rights provided by law.
D)   should ask to know specifically why.
E)   can reapply for credit after 30 days.F) C) and D)
G) B) and E)

Question 16

The debt-to-equity ratio is calculated by dividing your monthly debt payments (not including house payments) by your net worth.

Accepted Answer

A) True 
 B)False

Question 17

A home equity loan is a good source of credit for daily expenses.

Accepted Answer

A) True 
 B)False

Question 18

Your friends and neighbors can get credit information about you.

Accepted Answer

A) True 
 B)False

Question 19

If you are an Ontario resident and you have declared personal bankruptcy for the first time, that fact may be reported by credit bureaus for ____________ years.

Accepted Answer

A)   5
B)   7
C)   12
D)   20
E)   25F) A) and E)
G) B) and D)

Question 20

If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.

Accepted Answer

A) True 
 B)False

Exam 5: Introduction to Consumer Credit

A home equity loan is a good source of credit for daily expenses.

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Which of these is not a characteristic of Paypal?

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Debt-to-equity ratio is

Correct AnswerverifiedShow Answer

The debt-to-equity ratio is calculated by dividing your monthly debt payments (not including house payments) by your net worth.

Correct AnswerverifiedShow Answer

If you think that your bill is wrong, you should first

Correct AnswerverifiedShow Answer

Cobranding is the linking of a credit card with a business trade name offering "points" or premiums toward the purchase of a product or service.

Correct AnswerverifiedShow Answer

Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:

Correct AnswerverifiedShow Answer

The best way to maintain your credit standing is to:

Correct AnswerverifiedShow Answer

Which of the following is the best rating to have on your credit report?

Correct AnswerverifiedShow Answer

If your credit application is denied, you

Correct AnswerverifiedShow Answer

Most consumers have only one choice in financing current purchases.

Correct AnswerverifiedShow Answer

If you are an Ontario resident and you have declared personal bankruptcy for the first time, that fact may be reported by credit bureaus for ____________ years.

Correct AnswerverifiedShow Answer

Your friends and neighbors can get credit information about you.

Correct AnswerverifiedShow Answer

If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.

Correct AnswerverifiedShow Answer

What percentage of credit card users generally pay off their balance in full every month?

Correct AnswerverifiedShow Answer

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Correct AnswerverifiedShow Answer

The best way to maintain your credit rating is to

Correct AnswerverifiedShow Answer

A common example of a consumer loan is:

Correct AnswerverifiedShow Answer

If your monthly net (after-tax) income is $2,000, what should be your maximum amount spent on credit payments?

Correct AnswerverifiedShow Answer

Generally, most of the information in your credit file may be reported for only ______ years.

Correct AnswerverifiedShow Answer

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