Gianna The Goat - Study Guide CFM

When are you legally entitled to check your credit report for free?

You are entitled when denied credit/employment, a victim of identity theft, unemployed and seeking a job, or receiving public assistance.

What is the primary function of a credit bureau?

To collect, compile, and maintain consumer credit data to provide credit histories and scores to lenders.

How long can negative financial information remain on your credit report?

Negative financial information can stay on your credit report for 7 years.

How many years does a bankruptcy judgment remain on your credit record?

A bankruptcy judgment remains on your credit record for 7-10 years.

What are the Five Cs of Credit?

Character, Capacity, Capital, Collateral, and Conditions.

Is stock insurance provided?

No, stocks are not insured by the FDIC or NCUA.

What is one safe practice to avoid identity theft?

Shredding documents with personal information or creating strong, unique passwords.

What is the maximum amount you are legally responsible for if your credit card is stolen and you notify the issuer immediately?

The maximum amount is $50.

Define gross pay.

Gross pay is an employee's total earnings before taxes, benefits, or other deductions.

Define net pay.

Net pay is the amount an employee takes home after all taxes and deductions have been subtracted.

What is a tax exemption?

A specific amount of money that can be subtracted from your adjusted gross income to reduce taxable income.

Which form should a new employee complete for correct tax withholding?

IRS Form W-4.

What form must employers provide employees by January 31?

Employers must provide a W-2 form.

What does the NCUA do?

Insures deposits in credit unions and regulates credit unions.

What are the differences between banks and credit unions?

Banks are for-profit corporations owned by shareholders, while credit unions are non-profit cooperatives owned by members.

List one advantage and one disadvantage of ATM cards.

Advantage: Convenient access to cash 24/7. Disadvantage: Risk of fees or theft of the PIN.

Which type of account is the most liquid?

Checking accounts are the most liquid.

What does ‘Pay Yourself First’ mean?

Putting money into savings or investments as soon as you get paid.

Explain the relationship between risk and reward.

Higher rewards generally come with higher risk; safe investments usually offer lower returns.

What is an important investment principle related to risk?

Diversification helps reduce risk.

What are mutual funds?

Investment vehicles made of a pool of money collected from many investors to invest in securities.

Who pays the most in credit card interest over time?

Cardholders who only make minimum monthly payments.

What is the best indicator of the total cost of a loan?

APR (Annual Percentage Rate).

Where do the lowest interest rates on loans usually come from?

Traditional banks and credit unions for borrowers with excellent credit.

Define payday loans.

Short-term, high-interest loans designed to bridge the gap between paychecks.

Define principal.

The original amount of money borrowed, not including interest.

Define interest rate.

The percentage of the principal charged by the lender for using their money.

Define term (in loans).

The length of time over which a loan is scheduled to be repaid.

What is collateral?

An asset pledged by a borrower as security for a loan.

True or false: Banks share borrower credit histories with one another.

False.

What are fixed expenses?

Expenses that remain the same amount every month.

What are variable expenses?

Expenses that fluctuate in amount from month to month.

Distinguish between fixed and variable expenses using Bill Smith's finances as an example.

Fixed: Rent and car payment (set costs). Variable: Food and entertainment (dependent on choice).

What types of car insurance exist?

Liability, Collision, Comprehensive, Personal Injury Protection, and Uninsured Motorist.

What is a health insurance premium?

The monthly amount paid to keep a health insurance policy active.

What is a health insurance deductible?

The out-of-pocket amount paid before insurance starts covering medical services.

What factor does NOT affect car insurance premiums?

Your height or eye color.

What is one advantage of renting over buying a house?

Maintenance and repairs are the landlord's responsibility.

What is one disadvantage of renting an apartment?

No equity is built for the renter.

What information is included in a resume?

Contact info, work experience, education, skills, and certifications.

What does a cover letter do?

Introduces you, highlights qualifications, and persuades the hiring manager to read your resume.

What are the differences between federal and private student loans?

Federal loans are government-funded with protections; private loans depend on credit scores.

What distinguishes subsidized loans from unsubsidized loans?

Subsidized loans are need-based; unsubsidized loans accrue interest from disbursement.

What is a grace period?

Time after leaving school where loan payments are not required.

What repayment options are available for federal student loans?

Standard Repayment, Graduated Repayment, Extended Repayment, and Income-Driven Repayment.

What is FAFSA?

Free Application for Federal Student Aid.