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D/S Unit 2 Test Review
Test Description: Dollars and Sense
Instructions: Answer all questions to get your test result.
1) Which of the following is NOT a factor in determining a FICO score?
A
Getting a personal loan from the bank
B
Using credit cards
C
Paying cash for all purchases
D
Taking out a mortgage on a house
2) Which of the following is not a good idea for getting out of debt?
A
Quit borrowing money
B
Get a part time job or work overtime
C
Sell something
D
Borrow money from your parents to pay for the debt
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
Go into debt
D
Purchase an airline ticket
4) What factors affect a credit score?
A
all of these
B
type of debt
C
new debt
D
duration of debt
5) Which of the following is NOT a recommended step in the Drive Free method of purchasing a car?
A
Explore new car dealerships for the best interest rate
B
Place your savings in a mutual fund so that your money can make more money
C
Start with an inexpensive car and gradually move up in car value as your savings increase
D
Plan your purchase in advance using the sinking fund method of saving
6) Which of the following is the most cost-effective option for purchasing a home?
A
Get a 30-year mortgage with a 20% down payment.
B
Get a 30 year mortgage so that you can get the lowest possible monthly payments.
C
Get a 15 year mortgage with a 5% down payment.
D
The most ideal way to buy a house is to pay cash; otherwise 15 year mortgage with at least 10% down
7) Which of the following is NOT recommended in the debt snowball method of getting out of debt?
A
Attack your debt with intensity
B
List your debts in order from smallest to largest balance and focus on paying the smallest debt off first.
C
Every time you pay off a debt, you add its old minimum payment to your next debt payment
D
Every extra dollor you get should be thrown at the largest debt first
8) 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 court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck
C
A legal procedure for dealing with debt problems of individuals and businesses
D
Process of taking something back for failure to make payments
9) 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
Studies show that there is no change in spending behavior whether a person uses cash or credit
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
Spending behavior does not matter as long as you pay off the credit card balance each month
10) Which of the following is not a credit myth?
A
Debt is a tool and should be used to create prosperity
B
You have arrived financially once you get approved for a credit card
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
11) If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?
A
Amount of your down payment and employment history
B
none of these
C
History of rental and utility payments
D
both of these
12) A credit score is intended to measure:
A
The risk of your not repaying debt
B
Your financial success
C
The amount of money you have in the bank
D
Your income level
13) 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
20 years
B
1 year
C
10 years
D
5 years
14) You must establish credit in order to buy a house
A
True
B
False
15) There are three credit bureaus: Experian, TransUnion, and Equifax.
A
True
B
False
16) You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity.
A
True
B
False
17) You need to have a credit card to rent a car or check in to a hotel
A
False
B
True
18) Teens are a huge target of credit card companies today
A
False
B
True
19) Co-signing a loan is a good way to help a friend or relative.
A
False
B
True
*select an answer for all questions
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