Questions and Answers
In determining your _____ or overall ability to handle credit, a creditor will ask about your past credit performance.
creditworthiness
A responsible attitude toward paying bills and meeting obligations on time is called _____.
character
Your _____ will answer questions about how you have paid your bills, how many bills you have had and what type, how much total credit you have been given, and how much credit appears to be outstanding now.
credit history
A credit bureau issues a written statement called a(n) _____, which itemizes accumulated information about a person through subscribers and public records.
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A member of the credit bureau is called a(n) _____ and pays fees for use of the bureau's services in collecting information and issuing reports.
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The Consumer Credit Protection Act of 1968 is also known as the ________.
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_____ is the ability to repay a loan or make payments on a debt out of current income.
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Existing debts, stability of employment, and personal factors that determine a person's ability to meet financial obligations are called _____.
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A(n) _____ is a business that accumulates, stores, and distributes credit information to members.
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A(n) _____ is a type of rating used by credit bureaus in determining a person's general creditworthiness.
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A(n) _____ credit rating is earned when you pay your bills before the due date.
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A(n) _____ credit rating is earned when you pay your bills on the due date or within a short grace period.
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A(n) _____ credit rating is likely to result in denial of new credit.
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A(n) _____ credit rating is given to a person who pays during the grace period but occasionally takes longer.
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A(n) _____ is a person hired to collect the balance due.
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The act of treating people differently based on prejudice rather than individual merit is called _____.
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Your credit history is an important record of your past experiences with credit, and you have rights and responsibilities for its accuracy.
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A credit bureau is a nonprofit company established by members for the benefit of members.
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Most large credit bureaus are computerized clearinghouses that search for and retrieve information to make reports.
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If you are denied credit based on a credit report, inaccurate information in your file may be the case.
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A debt collector is allowed to make telephone calls at any time in order to collect overdue balances.
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The Consumer Credit Protection Act prevents discrimination in the judgment of creditworthiness.
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Information gathered for credit reports may come from credit applications when you apply for credit.
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A point system of credit rating is based on assigning value to such things as employment, amount of income, amount of current debt, or number of late payments.
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An excellent credit rating results when you pay your bills on the due date every month and never miss a payment.
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A person who is considered a good credit risk usually meets five basic qualifications, called the five Cs of credit.
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It is lawful for creditors to ask you for personal information, such as employment and residence history, in order to determine your creditworthiness.
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If you believe your bill contains an error, there usually is no hurry in resolving the problem.
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Which of the following is an unlawful purpose for a credit report?
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The act that provides that you may see your credit file at no charge within 30 days of a credit denial is the:
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If you believe there is an error in your statement, your complaint must be in writing and mailed within _____ days after you receive the statement.
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Your letter of complaint must be acknowledged in _____ days.
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Within _____ days of receiving your complaint, the creditor must either correct the error or explain why the bill is correct.
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Which is not one of the five Cs of credit?
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The Truth-in-Lending Act limits your liability when a credit card is lost or stolen to the first _____, unless the card is reported lost or stolen before it can be used.
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To pay your bills on the due date or soon after is to earn a(n) _____ credit rating.
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Which of the following questions could a creditor legally ask you?
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Which of the following would probably not be included in your credit report?
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Credit reports are issued by:
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Credit files are updated _____ by computers and search procedures.
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Which of the following would be a good first step in getting started with credit?
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Which of the following could become part of your credit record?
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The act known for its provisions requiring full disclosure of all charges in a credit transaction is called the:
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To see your credit file at any time would cost you:
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In many cases, people with poor credit ratings have:
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Debt collectors are required to:
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Study Notes
Creditworthiness and Character
- Creditworthiness: Refers to an individual's ability to manage credit, evaluated through past performance with credit.
- Character: The responsibility shown by an individual in paying bills and meeting financial obligations on time.
Credit History and Reports
- Credit History: A record detailing past payments, types, amounts of credit, and current outstanding credit.
- Credit Report: A document provided by credit bureaus that summarizes a person’s credit information gathered from various sources.
Credit Bureaus and Subscribers
- Credit Bureau: An organization that collects, stores, and distributes credit-related information to its members.
- Subscriber: An entity that subscribes to a credit bureau's services, paying fees for access to credit reports.
Consumer Credit Protection
- Truth-In-Lending Law: Established by the Consumer Credit Protection Act of 1968 to ensure transparency in credit transactions.
Five Cs of Credit
- Capacity: The ability to repay debts based on current income.
- Conditions: Existing debts and employment stability that affect financial obligations.
Credit Ratings and Scores
- Point System: Evaluates creditworthiness by assessing factors like employment status, income, and payment history.
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Credit Ratings:
- Excellent: Achieved by paying bills ahead of the due date.
- Good: Achieved by on-time bill payments within a grace period.
- Fair: Occasional late payments, but generally within the grace period.
- Poor: Frequent late payments or defaults, likely leading to credit denial.
Debt Collection
- Debt Collector: A professional employed to recover overdue debts.
- Legal Regulations: Collectors cannot make calls at any time and must allow consumers to dispute charges.
Consumer Rights and Credit Reports
- Accuracy of Credit History: Individuals have rights to ensure their credit histories are accurate and up-to-date.
- Fair Credit Reporting Act: Allows individuals to request their credit file without charge after a credit denial.
Legal Protections and Discrimination
- Credit Denial Information: Inaccurate data in credit files can lead to denial of credit; individuals must promptly address errors.
- Fair practices: Creditors can request personal information, but discrimination based on non-creditworthy factors is prohibited.
Timelines and Procedures
- Complaint Process: Errors in billing must be reported in writing within 60 days, with acknowledgment of receipt required within 30 days.
- Corrections: Creditors must address complaints or explain the accuracy of bills within 90 days.
Costs and Accessibility of Credit Files
- Access to Credit File: Individuals can review their credit files for a nominal fee, promoting transparency and responsibility.
Impacts of Poor Credit
- Individuals with poor credit ratings commonly experience missed payments, unpaid debts, or bankruptcy—factors significantly affecting their financial health.
Laws Affecting Credit
- Truth-in-Lending Act: Enforces full disclosure of credit transaction charges, ensuring consumers are informed about the costs and terms.
Factors Impacting Credit Reports
- Elements included in credit reports can range from account balances and credit history to major life events like lawsuits and bankruptcies.
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Description
This quiz covers key terminologies and concepts from Chapter 17 on Credit Records and Laws. Enhance your understanding of creditworthiness, character, and financial responsibility. Perfect for students studying finance or preparing for assessments.
