Chapter 06 – Introduction to Consumer Credit
126. (p. 203) Which federal law requires creditors to inform applicants of acceptance or rejection
of their credit application within 30 days of receiving a completed application?
127. (p. 172) Which of the following is most likely not a valid reason for using credit?
128. (p. 173) Which one of the following is an advantage of using credit?
Chapter 06 – Introduction to Consumer Credit
129. (p. 174) Which one of the following is a disadvantage of using credit?
130. (p. 175) Jake Skinner purchases a big screen TV on credit and will repay the loan with one
payment at the end of 90 days. What type of credit did Jake use?
131. (p. 175) Jennifer Garner purchases a sofa, love seat and reclining chair for her family room
and will make payments of $65 per month for the next twenty-four months. What type of
credit did Jennifer use?
Chapter 06 – Introduction to Consumer Credit
132. (p. 175) Larry Arnold gets a direct loan of money to go on vacation with his family. He will
repay the loan over the next twelve months. What type of credit did Larry use?
133. (p. 176) Gordon Carey uses his Visa card to purchase a new digital camera and lens. What
type of credit did Gordon use?
134. (p. 176) Jim Roy visits the doctor for his annual check-up which costs $85. He is billed for
this at the end of the month. What type of credit did Jim use?
Chapter 06 – Introduction to Consumer Credit
135. (p. 180) Which one of the following is important to do to help avoid credit card fraud?
136. (p. 181) What should you do when you shop on-line using your credit card?
137. (p. 183) Affan Chawdry has monthly net income of $1,050. He has a house payment of
$450 per month, a car loan with payments of $250 per month, a Visa card with payments of
$50 per month, and a credit card with a local department store with payments of $100 per
month. What is Affan’s debt payments-to-income ratio?
Chapter 06 – Introduction to Consumer Credit
138. (p. 183-184) Karen Price has determined that her net worth is $30,000, excluding her home.
She owes $80,000 on her mortgage and $15,000 on a car loan. What is Karen’s debt–to-equity
ratio?
139. (p. 186) Karen Price is 55 years old, divorced, and has worked at her current job for five
years. She is interested in looking at her credit report. Which of the following pieces of
information should she find in that report?
Chapter 06 – Introduction to Consumer Credit
140. (p. 190) Maryann Lawrence wants to get a loan in just her name. She knows the creditor
cannot:
141. (p. 190) Jennifer Rogers needs a loan to purchase a new car. She knows the creditor must:
142. (p. 192) The information in your credit report is primarily used by the credit bureau to
compute your
Chapter 06 – Introduction to Consumer Credit
143. (p. 186) Which of the following is a credit bureau?
144. (p. 192) Paul Carter is applying for a loan from a bank. The bank is concerned because Paul
is an airline pilot for United Airlines. The bank thinks that Paul may be laid off in the near
future. Which one of the 5 Cs of credit is the bank concerned with?
145. (p. 192) Jane Calvert is applying for a loan from a bank. The bank knows she owns a house
worth $150,000 and a car with a trade-in value of $15,000 as well as other personal assets
worth approximately $50,000. Which one of the 5 Cs of credit is the bank looking at?
Chapter 06 – Introduction to Consumer Credit
146. (p. 192) Charles Rickman is applying for a loan from the bank. The bank has determined
that he has never been late making payments on past loans. Which of the 5 Cs of credit is the
bank looking at?
147. (p. 192) Amy Farmer is getting a loan to buy a used car. The bank wants to know the trade-
in value of the car she is purchasing. Which of the 5 Cs of credit is the bank examining?
148. (p. 203) Michael Flowers believes that his credit card company has made an error in its
monthly statement to him. Which consumer protection law specifies procedures he can use to
dispute this monthly statement?
Chapter 06 – Introduction to Consumer Credit
149. (p. 203) Mohammad Ishaque has checked his credit report and believes there is an error in
it. Which consumer protection law specifies that he has the right to have errors in his credit
report investigated?
150. (p. 203) Samantha Prescott knows that credit companies must evaluate her on the same
basis as a borrower who is male. Which consumer protection law guarantees her this right?
151. (p. 203) Mike Cook has been receiving calls at work every two hours from a collection
company that is trying to collect a past due loan from him. He believes this is harassment and
that the collections company is not allowed to do this. Which consumer protection law
provides protection from this type of harassment?
Chapter 06 – Introduction to Consumer Credit
152. (p. 203) Lester McCann is thinking about getting a loan for a new car. He knows that when
he goes shopping for a loan that all of the banks must report the annual percentage rate as well
as all other terms and conditions of the loan. This will allow him to easily compare loans from
different banks. Which consumer protection law requires full disclosure on all loans?
153. (p. 175) Which one of the following would not typically be closed-end credit?
154. (p. 177-178) Cobranded credit cards:
Chapter 06 – Introduction to Consumer Credit
155. (p. 179-180) Which one of the following would not be a good use of a home equity loan?
156. (p. 195) If you want to improve your credit score you should:
157. (p. 183-184) Brian Porter’s net worth is $110,000, excluding his home. His liabilities of
$50,000 include all of his credit card balances and the balance due on his auto loan and home
improvement loan. His townhouse has a market value of $220,000 and he owes $190,000 to
his mortgage company. What is Brian’s debt-to-equity ratio?
Chapter 06 – Introduction to Consumer Credit
158. (p. 178) Stored value (or gift) cards:
159. (p. 192) Which FICO credit score would represent the least risky borrower?
160. (p. 171-174) What is consumer credit? What are its advantages and disadvantages?
Chapter 06 – Introduction to Consumer Credit
161. (p. 175-176) What are the two basic types of credit? Give examples of both.
Chapter 06 – Introduction to Consumer Credit
162. (p. 175) What are the three most common types of closed-end credit?
163. (p. 177) What is revolving check credit?
Chapter 06 – Introduction to Consumer Credit
164. (p. 182) How can you protect yourself against debit/credit card fraud?
165. (p. 183-184) What are the two general rules of measuring credit capacity?
Chapter 06 – Introduction to Consumer Credit
166. (p. 185) What are a few things to consider before you cosign a loan?
167. (p. 191-192) How do creditors determine your credit-worthiness?
168. (p. 203) Describe the federal law that protects you from billing mistakes.
Chapter 06 – Introduction to Consumer Credit
169. (p. 198-199) What can you do if your identity is stolen?
170. (p. 195) A friend comes to you for advice about improving their credit score. What advice
would you give them? Make sure to include the five steps for improving your credit score.