Question 1

What should you do if your identity is stolen?
A) Contact the fraud departments of each of the 3 major credit bureaus.
B) Ignore the problem and hope that it will go away.
C) Close all of your accounts and do not say anything to anyone.
D) Pay all the charges for which you are billed, even if they are not yours, so you can keep your credit accounts.
E) All of these

Accepted Answer

Contacting the fraud departments of each of the 3 major credit bureaus is the first and most important step to take when your identity is stolen. This will help put a fraud alert on your credit report and stop fraudulent activity. Ignoring the problem or paying charges that are not yours can lead to further damage and financial loss. Closing all accounts without speaking to anyone may not necessarily solve the issue if the thief has already opened new accounts in your name.

Question 2

The best way to maintain your credit rating is to:
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.

Accepted Answer

Repaying your debts on time is the best way to maintain a good credit rating. Using credit sparingly and paying with cash may not build credit or improve an existing credit score. Declaring bankruptcy damages a credit score and should only be used as a last resort. Using multiple credit cards may also hurt your credit if you carry balances on all of them.

Question 3

While you are resolving a billing dispute, a creditor may:
A) not threaten your credit rating.
B) send this information to a credit bureau.
C) require you to pay the bill in full and then credit your account if the error is found.
D) start the collection process.
E) demand that you surrender your credit card.

Accepted Answer

The creditor is not allowed to threaten your credit rating while a billing dispute is being resolved. This is considered a violation of the Fair Credit Billing Act.

Question 4

A valuable asset pledged to assure loan payments and subject to seizure upon default is called:
A) capacity.
B) character.
C) capital.
D) collateral.
E) conditions.

Accepted Answer

Collateral is a valuable asset pledged to assure loan payments and subject to seizure upon default. Capacity refers to a borrower's ability to repay a loan, character refers to a borrower's trustworthiness and reputation, capital refers to a borrower's financial resources, and conditions refer to any specific terms and requirements of a loan.

Question 5

If you have a complaint about consumer credit, you should first:
A) try to solve your problem directly with the creditor.
B) contact your attorney.
C) file a complaint with the Better Business Bureau.
D) report it to the state consumer protection agency.
E) complain to the Federal Reserve Bank in your district.

Accepted Answer

It is best to try and solve the problem directly with the creditor first, as this can often lead to a quicker and more satisfactory resolution. If this approach does not work, then other options such as contacting a lawyer or filing a complaint with a consumer protection agency can be considered.

Question 6

Which federal credit law sets the procedure for promptly correcting billing mistakes?
A) Fair Debt Collection Practices Act
B) Equal Credit Opportunity Act
C) Fair Credit Billing Act
D) Fair Credit Reporting Act
E) Truth in Lending Act

Accepted Answer

The Fair Credit Billing Act sets the procedure for promptly correcting billing mistakes on credit accounts.

Question 7

Which federal credit law protects you against an unauthorized use of your credit card?
A) Fair Credit Reporting Act
B) Fair Credit Billing Act
C) Equal Credit Opportunity Act
D) Fair Debt Collection Practices Act
E) Truth in Lending Act

Accepted Answer

The Fair Credit Billing Act protects consumers against unauthorized use of credit cards and provides a process for resolving billing disputes.

Question 8

A term that refers to the borrower's assets or net worth is called:
A) capacity.
B) character.
C) capital.
D) collateral.
E) conditions.

Accepted Answer

Capital refers to the borrower's assets or net worth, which can be used as a form of security or guarantee for a loan.

Question 9

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?
A) Character
B) Capacity
C) Capital
D) Collateral
E) Conditions

Accepted Answer

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

Question 10

If you have a problem with your creditor, the best solution is to:
A) file a lawsuit against the creditor.
B) solve your problem directly with the creditor.
C) complain to the Federal Reserve System.
D) complain to the Board of Governors.
E) wait for creditor action.

Accepted Answer

The best solution is to try to solve the problem directly with the creditor. Filing a lawsuit should be a last resort option and can be costly and time-consuming. Complaining to the Federal Reserve System or Board of Governors may not necessarily lead to a solution for an individual's specific problem. Waiting for the creditor to take action may not be effective and could potentially worsen the situation.

Question 11

If you have a complaint against The First National Bank of Edmond, who should you contact?
A) National Credit Union Association
B) Federal Trade Commission
C) Federal Reserve System
D) Comptroller of the Currency
E) Bank Vice-President

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 organization to contact regarding a complaint against the bank.

Question 12

If your credit application is denied, you:
A) should sue the credit rating agency.
B) should file a complaint against the merchant.
C) have no legal right to know why.
D) are entitled to know the specific reason you were denied credit.
E) can reapply for credit after 30 days.

Accepted Answer

According to the Fair Credit Reporting Act, if your credit application is denied, you are entitled to know the specific reason why. This information must be provided to you in writing within 60 days of your request. Knowing the reason can help you address any issues and improve your chances of being approved in the future.

Question 13

When you complain about your billing error, the creditor must acknowledge your letter within ____________ days.
A) 10
B) 20
C) 30
D) 60
E) 90

Accepted Answer

According to the Fair Credit Billing Act, the creditor must acknowledge the letter within 30 days and must investigate and resolve the issue within two billing cycles or 90 days.

Question 14

If you think that your bill is wrong, you should first:
A) contact the local credit bureau and inform it of the billing error.
B) complain to the Better Business Bureau.
C) contact your state consumer protection agency.
D) notify the creditor in writing within 60 days after the bill was mailed.
E) contact your attorney to settle the matter.

Accepted Answer

The best choice is to notify the creditor in writing within 60 days after the bill was mailed. This is because the Fair Credit Billing Act (FCBA) requires creditors to investigate billing errors upon receiving written notice from the consumer. It is important to do this within 60 days to ensure that your rights under the FCBA are protected. Contacting the local credit bureau, complaining to the Better Business Bureau, contacting your state consumer protection agency or hiring an attorney are all possible next steps, but the first step should always be to notify the creditor in writing.

Question 15

Which federal consumer credit law provides specific cost disclosure requirements for the annual percentage rate and the finance charge as a dollar amount?
A) Fair Debt Collection Practice Act
B) Equal Credit Opportunity Act
C) Fair Credit Billing Act
D) Fair Credit Reporting Act
E) Truth in Lending Act

Accepted Answer

The Truth in Lending Act (TILA) requires lenders to disclose specific cost information to consumers before extending credit, including the annual percentage rate (APR) and the finance charge as a dollar amount. This law aims to ensure that consumers are fully informed about the terms and costs of credit so they can make informed borrowing decisions.

Question 16

Which federal law protects you by requiring credit bureaus to furnish correct and complete information to creditors?
A) Fair Credit Reporting Act
B) Truth in Lending Act
C) Fair Credit Billing Act
D) Equal Credit Opportunity Act
E) Fair Debt Collection Practices Act

Accepted Answer

The Fair Credit Reporting Act (FCRA) protects consumers by requiring credit bureaus to furnish correct and complete information to creditors. The law also ensures that consumers can access and dispute any errors in their credit reports.

Question 17

The borrower's financial ability to meet credit obligations is called:
A) capacity.
B) character.
C) capital.
D) collateral.
E) conditions.

Accepted Answer

Capacity refers to the borrower's financial ability to meet credit obligations, which includes their income, expenses, and overall financial stability. This is a crucial factor that lenders consider when assessing a borrower's creditworthiness.

Question 18

Which federal consumer credit law regulates the advertising of credit terms?
A) Fair Debt Collection Practices Act
B) Equal Credit Opportunity Act
C) Fair Credit Billing Act
D) Fair Credit Reporting Act
E) Truth in Lending Act

Accepted Answer

The Truth in Lending Act (TILA) regulates the advertising of credit terms, and requires lenders to disclose the terms and conditions of credit, including interest rates and fees, in a clear and understandable manner.

Question 19

Which federal consumer credit law prohibits credit discrimination based on sex and marital status?
A) Truth in Lending Act
B) Fair Credit Reporting Act
C) Fair Credit Billing Act
D) Equal Credit Opportunity Act
E) Fair Debt Collection Practices Act

Accepted Answer

The Equal Credit Opportunity Act prohibits credit discrimination based on sex, marital status, race, color, religion, national origin, age, receipt of public assistance, or the exercise of any rights under the Consumer Credit Protection Act. The other options listed relate to different aspects of consumer credit laws.

Question 20

In evaluating your credit application, a lender may:
A) ask your age.
B) want to know if you are on public assistance.
C) require your marriage certificate.
D) ask if you are married or divorced.
E) ask your race and nationality.

Accepted Answer

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

Quiz 6: Introduction to Consumer Credit

What should you do if your identity is stolen?

The best way to maintain your credit rating is to:

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

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

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

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

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

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

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?

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

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

If your credit application is denied, you:

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

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

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

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

The borrower's financial ability to meet credit obligations is called:

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

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

In evaluating your credit application, a lender may: