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Dollars And Sense Unit 2 Test Review MC
Test Description: Unit 2 Debt Test Multiple Choice Questions
Instructions: Answer all questions to get your test result.
1) Which of the following is NOT a factor in determining a FICO score?
A
taking out a mortgage on a house
B
getting a personal loan from the bank
C
paying cash for all purchases
D
using credit cards
2) Which of the following is not a good idea for getting out of debt?
A
Borrow money from your parents to pay for the debt
B
quit borrowing money
C
sell something
D
get a part time job or work overtime
3) Which of the following items cannot be done with a debit card but can be done with a credit card?
A
purchase something online
B
rent a car
C
purchase an airline ticket
D
Go into debt
4) What factors affect a credit score?
A
type of debt
B
duration of debt
C
new debt
D
all of these
5) Which of the following is not a recommended step in the Drive Free method of purchasing a car?
A
Place your savings in a mutual fund so that your money can make more money
B
Plan your purchase in advance using the sinking fund method of saving
C
Start with an inexpensive car and gradually move up in car value as your savings increase
D
Explore new car dealerships for the best interest rate
6) Which of the following is not recommended in the debt snowball method of getting out of debt?
A
List your debts in order from smallest to largest balance and focus on paying the smallest one first
B
Attack your debt with intensity
C
Every time you pay off a debt, you add its old minimum payment to your next debt payment
D
Every extra dollar you get should be thrown at the largest debt first
7) What is paycheck garnishment?
A
Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments.
B
A legal procedure for dealing with debt problems of individuals and businesses
C
A court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck
D
Process of taking something back for failure to make payments
8) Which of the following best summarizes how the use of a credit card for purchases instead of cash can change one's spending behavior.
A
Spending behavior does not matter as long as you pay off the credit card balance each month
B
Studies show that consumers typically spend more when using credit as opposed to cash purchases
C
People typically spend less when they know what they that they are earning credit card rewards
D
Studies show that there is no change in spending behavior whether a person uses cash or credit
9) Which of the following is not a credit myth?
A
You have arrived financially once you get approved for a credit card
B
Debt is a tool and should be used to create prosperity
C
The lottery and other forms of gambling will make you rich
D
Borrowing money can have serious consequences and prevent you from building wealth
10) If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?
A
None o these; You cannot get a mortgage without a credit history
B
Amount of your down payment and employment history
C
History of payments, down payment, and employment history
D
History of rental and utility payments
11) A credit score is intended to measure:
A
Your income level
B
The risk of your not repaying debt
C
The amount of money you have in the bank
D
Your financial success
12) 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:
A
10 years
B
20 years
C
1 year
D
5 years
*select an answer for all questions
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