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The Federal Trade Commission (FTC) is one of many U.S. federal agencies that regulate the consumer credit system and enforce the laws related to it.
True
A yearly fee that's charged by the credit card company for the convenience of the credit card.
Annual fee
Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments.
Debt snowball
Which of the following is the most cost-effective option for purchasing a home?
The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%.
It is okay to use a credit card if you pay it off every month.
False
What is paycheck garnishment?
A court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck
A long-term rental agreement on a car; a form of secured long-term debt.
Lease
Which of the following is not a factor in determining a FICO score?
Paying cash for all purchases
What factors affect a credit score?
all of the above
(type of debt, new debt, duration of debt)
You must establish credit in order to buy a house.
False
Which of the following is not a good idea for getting out of debt?
Borrow money from your parents to pay for the debt
Co-signing a loan is a good way to help a friend or relative.
False
An interest rate charged to a customer during the early stages of a loan; the rate often goes up after a specified period of time.
Introductory rate
When a person owes more on an item (like a car or house) than it is worth, the person is said to be _________ on the loan.
Upside down
Which of the following is not a recommended step in the Drive Free method of purchasing a car?
Explore new car dealerships for the best interest
A detailed report of an individual's credit history.
Credit report
Individual account information is removed from your credit report seven years after the last activity on the account, except for Chapter 7 bankruptcy, which stays on your credit report for:
10 years
Teens are a huge target of credit card companies today.
True
Which of the following is a sign that your identity may have been stolen?
all of the above
(a call from a collection agency about a debt you didn't incur, bank and billing statements don't arrive on time, your credit report shows accounts you didn't open)
Which of the following things cannot be done with a debit card but can be done with a credit card?
Go into debt
You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity.
True
Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated.
Loan term
Which of the following is not a credit myth?
Borrowing money can have serious consequences and prevent you from building wealth.
If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?
History of rental and utility payments
You need to have a credit card to rent a car or check in to a hotel.
False
Which of the following best summarizes how the use of a credit card for purchases instead of cash can change one's spending behavior?
Studies show that consumers typically spend more when using credit as opposed to cash purchases.
A credit score is intended to measure:
The risk of your not repaying debt
Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
Annual percentage rate (APR)
Under the Fair Credit Reporting Act (FCRA), any person or organization may check a person's credit information without having a legitimate need.
False
If you are a victim of identity theft, you are only responsible for paying back half of the debt.
False
Which of the following is not recommended in the debt snowball method of getting out of debt?
Every extra dollar you get should be thrown at the largest debt first.
A card issued by a bank that allows users to finance a purchase.
Credit card
There are three credit bureaus: Experian, TransUnion and Equifax.
True
A decrease or loss in value.
Depreciation
Which of the following statements is false?
Under FCRA, consumers are allowed to receive one free credit report every five years.
Note 
Flashcard (33)