Borrowing Money Standard 7 Assessment

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1 1 Name: Class Period: Borrowing Money Directions: Match each description in the column below with the CORRECT term from the list. Write the letter of the term in the space provided. A. Interest B. Interest Rate C. Loan Agreement D. Secured Credit E. Installment Credit F. Credit Bureau G. Credit History H. Truth in Lending Act I. Equal Credit Opportunity Act J. Fair Debt Collections Practices Act K. Consumer Credit Reporting Act L. Credit Repair Organizations Act A type of contract between the borrower and the lender explaining the requirements of fulfilling the loan. The percentage rate of interest charged to the borrower. Makes it illegal for groups to make false promises or claims about improving your credit history. Prohibits debt collectors from engaging in unfair, deceptive, or abusive practices when collecting debts. An official record of a borrower s credit activity, including borrowing and payments. Payment for the use of someone else s money. A loan repaid with a fixed number of equal payments. An establishment that collects and distributes credit information of individuals and businesses. Credit with collateral for the lender. Ensures all individuals have an equal opportunity to receive credit or loans.

2 Requires all lenders to inform potential lenders about the cost of borrowing money, including finance charges and the annual percentage rate. Requires free credit reports for the unemployed, persons on public assistance, and fraud victims. Directions: Circle the letter of the choice that BEST completes each statement. 13. When you apply for a loan, most lenders will check your score. a. FICO b. EPASS c. Consumer Credit d. Personal Finance Test 14. Which of the following statements is FALSE? a. Qualifications for borrowing money are basically the same from lender to lender. b. Lenders are most concerned about your ability to repay the loan. c. Building a good relationship with a banker can help you get a loan. d. When shopping for a loan, it pays to compare lenders. 15. Most credit cards are a. the same as cash. b. not reported to the credit bureau. c. an example of installment credit. d. an example of secured credit. 16. People borrow money because a. it is a convenient, low cost way to make purchases. b. they do not have enough cash or savings to make a purchase. c. they do not make enough money. d. they are uninformed about other ways to make purchases. 17. Which of the following is the BEST reason to borrow money? a. To buy a new pair of shoes for the prom b. To pay your cell phone bill c. To pay off your credit cards d. To buy a house

3 3 18. A prepayment clause allows the borrower to a. borrow additional funds as needed. b. make additional payments or pay off a loan early. c. pay lower interest rates if they make their payments on time. d. skip a loan payment without penalty when they do not enough money to pay their bills. 19. APR is the a. Applied Personal Rate. b. Applied Percentage Rate. c. Annual Percentage Rate. d. Annual Personal Rate of Interest. 20. MOST consumer credit laws are designed to a. punish consumers for making poor choices when borrowing money. b. punish lenders for mistreating consumers. c. ensure that consumers and lenders are treated fairly and equally. d. make it more difficult for consumers to get loans. 21. When computing your credit score, the most important factor is do you a. pay your bills on time? b. use credit cards? c. work for the government? d. need the money? 22. When making credit card payments, always pay a. the minimum amount requested on the statement. b. more than the minimum amount requested on the statement. c. with a check. d. with cash. 23. Which of the following statements is TRUE? a. Higher FICO scores results in higher interest rates. b. Higher FICO scores results in higher payments on loans. c. Lower FICO scores result in lower interest rates. d. Lower FICO scores result in higher interest rates.

4 4 24. Your credit file contains much information about you, including a. your age. b. your race. c. the number of times you apply for credit. d. the place where you work and your supervisor s name. 25. Which of the following is an example of secured credit? a. Borrowing to buy a car b. Getting a credit card c. Making payments to pay for a hospital bill d. Borrowing to pay for a vacation 26. Interest rates on credit cards a. vary with your level of income. b. are basically the same for everyone. c. will vary greatly, depending upon several factors. d. will vary little from credit company to credit card company. 27. Your credit score will impact all of the following EXCEPT your a. ability to get a job. b. ability to get an apartment. c. interest rates. d. monthly balance. 28. Which of the following types of lenders offers loans to high risk customers at very high fees? a. Payday loan companies b. Credit card cash advance c. Home equity bank loans d. Credit unions 29. Most negative information such as late payments and defaults on loans stays in your credit file for years. a. 2 b. 15 c. 7 d. 10

5 5 30. If your credit card is lost or stolen and you report it immediately to your credit card company, the most you can lose is a. $10. b. $25. c. $50. d. $ In Oklahoma, MOST consumer protection laws are enforced by the a. Oklahoma Bankers Association. b. Oklahoma Department of Treasury. c. State Office of Personal Finance. d. State Attorney General s Office. 32. If you want to dispute any information included in your credit file, you a. must sue the credit bureau. b. need an attorney to write a letter. c. need to write a letter or file a report online with the credit bureau. d. have no right to protest and must wait until the credit bureau removes it from your file. 33. Before applying a loan, it is advisable to a. get a copy of your credit report to check it for errors. b. ask your banker to review your report to see if you will qualify. c. ask your creditors to remove any negative information from your credit file. d. wait to see what happens, then complain if something is wrong with your credit file. 34. Lenders in the United States rely on three primary credit bureaus. Which of the following is NOT one of them? a. Experian b. Equifax c. Equitable d. TransUnion

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