Question 1

What percentage of credit card users generally pay off their balance in full every month?

Accepted Answer

A)   20%
B)   30%
C)   50%
D)   70%
E)   more than 80%F) A) and B)
G) A) and C)

Question 2

Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:

Accepted Answer

A)   a line of credit.
B)   convenience credit.
C)   revolving credit.
D)   installment credit.
E)   bank card credit.F) A) and E)
G) B) and E)

Question 3

If you are an Ontario resident and you have declared personal bankruptcy for the first time, that fact may be reported by credit bureaus for ____________ years.

Accepted Answer

A)   5
B)   7
C)   12
D)   20
E)   25F) D) and E)
G) B) and C)

Question 4

The best way to maintain your credit standing is to:

Accepted Answer

A)   carry no credit cards
B)   pay all credit card invoices within 120 days
C)   repay your debts on time
D)   cancel any cars with outstanding balances
E)   if the balance is high and you cannot pay, claim your card was lost and misused by a 3rd partyF) C) and D)
G) A) and D)

Question 5

A home equity loan is a good source of credit for daily expenses.

Accepted Answer

A) True 
 B)False

Question 6

Which of these is not a characteristic of Paypal?

Accepted Answer

A)   Facilitates online auction payments.
B)   Offers password protected accounts.
C)   Allows use of credit cards.
D)   Transfers funds in U.S. dollars.
E)   No annual fees.F) B) and D)
G) B) and C)

Question 7

Debt-to-equity ratio is

Accepted Answer

A)   a useless ratio for determining your credit capacity.
B)   calculated by dividing monthly debt payments by net monthly income.
C)   determined by dividing your assets by liabilities.
D)   calculated by dividing total liabilities by net worth.
E)   rarely used by creditors in determining credit worthiness.F) A) and B)
G) A) and E)

Question 8

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Accepted Answer

A) True 
 B)False

Question 9

If your credit application is denied, you

Accepted Answer

A)   can sue the credit rating agency.
B)   can file a complaint against the merchant.
C)   don't have any rights provided by law.
D)   should ask to know specifically why.
E)   can reapply for credit after 30 days.F) B) and D)
G) D) and E)

Question 10

The best way to maintain your credit rating is to

Accepted Answer

A)   use credit sparingly.
B)   pay cash for your purchases.
C)   repay your debts on time.
D)   declare a Chapter 7 bankruptcy.
E)   use as many credit cards as you can.F) A) and C)
G) B) and E)

Question 11

Cobranding is the linking of a credit card with a business trade name offering "points" or premiums toward the purchase of a product or service.

Accepted Answer

A) True 
 B)False

Question 12

Your friends and neighbors can get credit information about you.

Accepted Answer

A) True 
 B)False

Question 13

If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.

Accepted Answer

A) True 
 B)False

Question 14

If you think that your bill is wrong, you should first

Accepted Answer

A)   contact the local credit bureau and inform it of the billing error.
B)   complain to the Better Business Bureau.
C)   contact your provincial consumer protection agency.
D)   notify the creditor of the error.
E)   contact your attorney to settle the matter.F) C) and E)
G) A) and E)

Question 15

Most consumers have only one choice in financing current purchases.

Accepted Answer

A) True 
 B)False

Question 16

Generally, most of the information in your credit file may be reported for only ______ years.

Accepted Answer

A)   1
B)   3
C)   7
D)   9
E)   12F) A) and E)
G) A) and C)

Question 17

If your monthly net (after-tax)  income is $2,000, what should be your maximum amount spent on credit payments?

Accepted Answer

A)   $200
B)   $300
C)   $400
D)   $500
E)   $600F) A) and E)
G) B) and C)

Question 18

The debt-to-equity ratio is calculated by dividing your monthly debt payments (not including house payments) by your net worth.

Accepted Answer

A) True 
 B)False

Question 19

A common example of a consumer loan is:

Accepted Answer

A)   a credit card issued by a department store.
B)   a credit card issued by VISA or MasterCard.
C)   using overdraft protection at a bank.
D)   using a cashier's check to pay for a purchase.
E)   a mortgage loan.F) None of the above
G) C) and E)

Question 20

Which of the following is the best rating to have on your credit report?

Accepted Answer

A)   L0
B)   L10
C)   R0
D)   R1
E)   R9F) C) and D)
G) C) and E)

Exam 5: Introduction to Consumer Credit

A common example of a consumer loan is:

Correct AnswerverifiedShow Answer

The best way to maintain your credit standing is to:

Correct AnswerverifiedShow Answer

If you are an Ontario resident and you have declared personal bankruptcy for the first time, that fact may be reported by credit bureaus for ____________ years.

Correct AnswerverifiedShow Answer

Which of the following is the best rating to have on your credit report?

Correct AnswerverifiedShow Answer

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Correct AnswerverifiedShow Answer

Cobranding is the linking of a credit card with a business trade name offering "points" or premiums toward the purchase of a product or service.

Correct AnswerverifiedShow Answer

Debt-to-equity ratio is

Correct AnswerverifiedShow Answer

A home equity loan is a good source of credit for daily expenses.

Correct AnswerverifiedShow Answer

What percentage of credit card users generally pay off their balance in full every month?

Correct AnswerverifiedShow Answer

Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:

Correct AnswerverifiedShow Answer

If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.

Correct AnswerverifiedShow Answer

If your credit application is denied, you

Correct AnswerverifiedShow Answer

If your monthly net (after-tax) income is $2,000, what should be your maximum amount spent on credit payments?

Correct AnswerverifiedShow Answer

The debt-to-equity ratio is calculated by dividing your monthly debt payments (not including house payments) by your net worth.

Correct AnswerverifiedShow Answer

The best way to maintain your credit rating is to

Correct AnswerverifiedShow Answer

Generally, most of the information in your credit file may be reported for only ______ years.

Correct AnswerverifiedShow Answer

Your friends and neighbors can get credit information about you.

Correct AnswerverifiedShow Answer

Most consumers have only one choice in financing current purchases.

Correct AnswerverifiedShow Answer

Which of these is not a characteristic of Paypal?

Correct AnswerverifiedShow Answer

If you think that your bill is wrong, you should first

Correct AnswerverifiedShow Answer

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