Question 1

Which federal consumer credit law provides specific cost disclosure requirements for the annual percentage rate and the finance charge as a dollar amount?

Accepted Answer

The Truth in Lending Act requires lenders to provide specific cost disclosure requirements, including the annual percentage rate and the finance charge as a dollar amount, to consumers applying for credit.

Question 2

Which federal credit law sets the procedure for promptly correcting billing mistakes?

Accepted Answer

The Fair Credit Billing Act establishes procedures for resolving billing errors on credit accounts, including procedures for consumers to dispute charges on their billing statements.

Question 3

Which federal consumer credit law prohibits credit discrimination based on sex and marital status?

Accepted Answer

The Equal Credit Opportunity Act prohibits credit discrimination based on several factors, including sex and marital status. The Truth in Lending Act regulates how lenders disclose the terms of credit, the Fair Credit Reporting Act regulates how credit reporting agencies handle consumers' credit information, the Fair Credit Billing Act provides a mechanism for consumers to dispute billing errors, and the Fair Debt Collection Practices Act regulates how debt collectors can interact with consumers.

Question 4

Which federal law protects you by requiring credit bureaus to furnish correct and complete information to creditors?

Accepted Answer

The Fair Credit Reporting Act requires credit bureaus to furnish correct and complete information to creditors, and also ensures that consumers have access to their credit reports and can dispute any errors or inaccuracies. The other laws listed provide different protections, such as regulating debt collection practices (Fair Debt Collection Practices Act) or ensuring equal access to credit regardless of race, gender, or other factors (Equal Credit Opportunity Act).

Question 5

A loan officer is examining your income and the amount of your existing debt payments in deciding whether to make a loan to you today.Which aspect of the 5 Cs of lending is the loan officer most likely looking at?

Accepted Answer

The loan officer is most likely looking at the capacity aspect of the 5 Cs of lending, which refers to the borrower's ability to repay the loan based on their income and existing debt payments.

Question 6

If you have a complaint against The First National Bank of Edmond,who should you contact?

Accepted Answer

The Comptroller of the Currency is responsible for regulating and supervising national banks, including The First National Bank of Edmond. Therefore, they would be the appropriate entity to make a complaint to.

Question 7

Which consumer credit law prohibits creditors from requiring women to reapply for credit upon a change in marital status?

Accepted Answer

The Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. Specifically, it prohibits creditors from requiring women to reapply for credit upon a change in marital status.

Question 8

A valuable asset pledged to assure loan payments and subject to seizure upon default is called:

Accepted Answer

Collateral is a valuable asset pledged to ensure loan payments and subject to seizure upon default. Capacity relates to a borrower's ability to repay a loan based on their income and expenses, while character refers to their creditworthiness and reputation. Capital refers to a borrower's overall financial strength. Conditions refer to the terms and requirements of the loan agreement.

Question 9

Which federal consumer credit law regulates the advertising of credit terms?

Accepted Answer

The Truth in Lending Act (TILA) regulates the advertising of credit terms, requiring lenders to disclose the annual percentage rate (APR) and other key terms of credit in a clear, conspicuous, and uniform manner. TILA applies to most types of consumer credit, including credit cards, auto loans, and mortgages.

Question 10

When you complain about your billing error,the creditor must acknowledge your letter within ____________ days.

Accepted Answer

According to the Fair Credit Billing Act, the creditor must acknowledge your letter within 30 days of receiving it.

Question 11

If you have a problem with your creditor,the best solution is to:

Accepted Answer

The best solution is to attempt to solve the problem directly with the creditor. This can often be done through communication and negotiation, potentially saving time and money compared to filing a lawsuit or complaining to a regulatory agency.

Question 12

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

Accepted Answer

The best first step is to notify the creditor in writing within 60 days after the bill was mailed. This gives the creditor the opportunity to investigate and correct any errors on the bill. It is important to do this in a timely manner to protect your rights under federal law. If the issue is not resolved with the creditor, then you can contact your state consumer protection agency or file a complaint with the Better Business Bureau. Contacting the local credit bureau or attorney is not necessary at this point.

Question 13

The best way to maintain your credit rating is to:

Accepted Answer

Repaying your debts on time is the best way to maintain your credit rating. This shows that you are responsible with credit and can be trusted to make payments on time. Using credit sparingly and having a mix of credit types can also be beneficial, but they are not as important as making timely payments. Paying cash for your purchases and declaring bankruptcy are not relevant to maintaining a credit rating, and using too many credit cards can actually hurt your credit score.

Question 14

If your credit application is denied,you:

Accepted Answer

Federal law requires that if your credit application is denied, you are entitled to know the specific reason why. This allows you to take steps to improve your credit and increase your chances of being approved for credit in the future.

Question 15

What should you do if your identity is stolen?

Accepted Answer

Contacting the fraud departments of each of the 3 major credit bureaus (Equifax, Experian, and TransUnion) is the first step to take in case of identity theft. This will help you put a fraud alert on your credit report and stop any new accounts from being opened in your name. You should also report the theft to the Federal Trade Commission (FTC) and file a police report.

Answer: E
 None of the other options are recommended. Ignoring the problem can lead to further damage to your credit and financial situation. Closing all accounts can also affect your credit score negatively, and not paying the charges could result in legal action against you. Therefore, it's best to take immediate action by contacting the credit bureaus, reporting to the FTC and the police, and following their recommended steps to resolve the identity theft.

Question 16

Which federal credit law protects you against an unauthorized use of your credit card?

Accepted Answer

The Fair Credit Billing Act protects consumers against unauthorized use of their credit cards by establishing procedures for resolving billing errors on credit card accounts, including unauthorized charges.

Question 17

A term that refers to the borrower's assets or net worth is called:

Accepted Answer

Capital refers to the borrower's assets or net worth. It is an important factor considered by lenders when evaluating a borrower's ability to repay a loan. Collateral, on the other hand, refers to specific assets that a borrower pledges as security for a loan. Capacity relates to a borrower's ability to repay a loan, character refers to their reputation and creditworthiness, and conditions refer to external factors that may affect the borrower's ability to repay the loan.

Question 18

If you have a complaint about consumer credit,you should first:

Accepted Answer

The best first course of action would be to try to solve the problem directly with the creditor. This allows for a quicker resolution and can often be more effective than involving a third party. If this does not work, then other options such as contacting a state or federal agency may be necessary.

Question 19

While you are resolving a billing dispute,a creditor may:

Accepted Answer

The creditor should not threaten your credit rating while you are resolving a billing dispute. This is against the Fair Credit Billing Act.

Question 20

In evaluating your credit application,a lender may:

Accepted Answer

The answer of In evaluating your credit application,a lender may:
...

Quiz 6: Introduction to Consumer Credit