Credit Literacy Group Quiz #1

The Credit Repair Company promised a money back guarantee if they were successful in getting the item deleted from the credit report. However, in this case, the item reappeared on the file after it had been deleted. Therefore, the Credit Repair Company did not fulfill their agreement, and as a result, they should refund the $350.

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When you pay "points" when obtaining a mortgage, it means that you are paying an upfront fee to the lender in exchange for a lower interest rate on your mortgage. This can be beneficial because a lower interest rate will result in lower monthly mortgage payments and potentially save you money over the life of the loan. It is a way to reduce the overall cost of borrowing and make the mortgage more affordable.

The statement is false because in order to avoid paying any interest on the microwave purchase, you would need to pay off the full balance of $200 by the end of the grace period. Paying only $210 towards the balance would not cover the full amount owed and therefore you would still incur interest on the remaining balance.

Paying $10,000 for the car now and getting zero back at the end of 20 years is the better option. This is because the car is guaranteed to last 20 years without repair or maintenance. By paying $10,000 upfront and not receiving any money back, you are effectively paying less for the car compared to the second option. Paying $20,000 upfront and getting all $20,000 returned at the end of 20 years would mean that you are essentially loaning the dealership $20,000 for 20 years without any interest or benefit. Therefore, it is financially wiser to choose the first option.

Once the credit bureaus have deleted the disputed reference and concluded their investigation, the creditor is allowed to report the information again to the credit bureaus. This means that the derogatory information can potentially reappear on your credit report.

Believe it or not, even with all of the press about credit and credit scores, 90% of American consumers believe this is correct; it is not. ALL consumers need to know the truth. Become a member or take our online courses to learn what you should have been taught already.

The introductory interest rate on a new credit card must stay in place and not change for 6 months. This means that for the first 6 months after getting the credit card, the interest rate will remain the same and will not increase or fluctuate. After the 6-month period, the regular interest rate will apply.

The correct answer is "ask the creditor whether the information they reported to the bureau(s) was accurate; if the creditor says the information is correct, the investigation is complete." This is the correct answer because it accurately describes the investigation process that credit bureaus are required to follow. After receiving a dispute from a consumer, the credit bureau must reach out to the creditor and ask them to verify the accuracy of the reported information. If the creditor confirms that the information is correct, the investigation is considered complete.

False. Having Identity Theft Protection Coverage does not mean that the coverage will pay for any amounts for which you are deemed responsible. Identity Theft Protection Coverage typically helps in detecting and resolving identity theft issues, but it does not absolve the individual from any responsibility or liability for the theft. The coverage may assist in the recovery process and provide certain services, but it does not guarantee financial reimbursement for any losses or damages incurred.

Based on the information provided, the correct answer is $150. This is because the question states that the thief has charged $2500 on each of the 3 credit cards the victim currently has, which amounts to $7500. The thief has also opened 4 new credit cards with $5000 charged on each new card, which amounts to $20000. Therefore, the total charges made under the victim's name is $27500. However, since the victim has filed the required police reports, they are not personally responsible for these charges and are not required to pay any of it except for the $150, which is the maximum liability for unauthorized charges on credit cards according to the Fair Credit Billing Act.

The statement is false because not every consumer has a credit score in their credit file that adjusts up or down each month based on information reported by creditors. While many consumers do have a credit score, it is not a requirement for everyone and not all credit scores are updated monthly. Additionally, credit scores can be affected by various factors, not just information reported by creditors.

The correct answer is "Approximately $110 per month." This is because credit scores have a significant impact on mortgage interest rates. A lower credit score means a higher interest rate, which in turn leads to a higher monthly mortgage payment. The 40-point difference in credit scores between Chris and Sandy is likely to result in a significant difference in their interest rates, leading to Chris having a mortgage payment approximately $110 higher than Sandy's.

Consumers with credit scores lower than 760 should be prepared to pay extra in interest expense because the credit industry considers these customers to be a higher risk. A credit score is a numerical representation of an individual's creditworthiness, and a lower score indicates a higher risk of defaulting on loans or credit payments. Lenders and credit institutions use credit scores to assess the likelihood of a borrower repaying their debts. Therefore, individuals with lower credit scores are seen as riskier borrowers, and lenders compensate for this increased risk by charging higher interest rates.

The statement states that there is no method of identity theft protection that is 100% effective in preventing identity theft for the purpose of opening credit in your name. The correct answer is false because there are methods of identity theft protection, such as credit monitoring services and freezing your credit, that can significantly reduce the risk of identity theft and make it more difficult for someone to open credit in your name. While no method can guarantee 100% prevention, taking proactive steps can greatly enhance your protection against identity theft.