Cwmc Module 7: Credit Competency Test
This quiz is part of LFE Institute's CWMC (Certified Workplace Money Coaching) course. It will test your proficiency in the Credit Module (Module 7) of the program. The questions are all multiple choice, and are designed to be a review of this Module. Let LFE know when you've successfully completed this test and are ready to begin the next Module. Correct answers required for passing grade: 12/14
- 1.Which of the following statements are credit myths? (check all that apply)
- A.
The credit card companies wouldn't send me applications in the mail if I couldn't afford it.
- B.
If I don't use credit, I'll never be able to buy anything.
- C.
Credit card interest is deductible.
- D.
I'll hurt my credit score if I check it all the time.
- 2.Which of the following statements is true if you pay your credit cards in full and on time?
- A.
You can open four new credit cards this year with no negative impact on your credit score.
- B.
You will always get the best available interest rates.
- C.
You are making a wise financial choice.
- D.
Your credit card interest rate will remain below 8%.
- E.
None of the above.
- 3.Which of the following may be an indication you have been the victim of a scam? (check all that apply)
- A.
Unknown charges show up on billing statements.
- B.
Bills arrive from unknown or unfamiliar sources.
- C.
Your credit report contains inquiries about accounts you did not open.
- D.
A collection agency cannot give you specifics on charges they say you owe.
- 4.From which of the following sources can consumers obtain free credit reports twice a year?
- A.
Www.FreeCreditReport.com
- B.
A credit counseling agency
- C.
A collection agency
- D.
Their local bank
- E.
None of the above.
- 5.What is the minimum number of Web site resources required in every response?
- A.
0
- B.
1
- C.
2
- D.
3
- E.
None are necessary if the information is common knowledge.
- 6.Which of the following are major drawbacks of working with a credit counseling agency? (check all that apply)
- A.
It will negatively affect your credit score.
- B.
The agency must report it to your employer.
- C.
Credit counseling agencies garnish wages as payment for services.
- D.
They may lock you into a contract.
- 7.What suggestions would you give to someone just beginning to establish a credit history? (check all that apply)
- A.
Open a checking and savings account.
- B.
Apply for a department store or gas credit card and max it out immediately.
- C.
Apply for loan or credit card through your bank.
- D.
Once approved for one card, apply for several more.
- 8.Under the CARD Act, credit card companies _________. (check all that apply)
- A.
Have a cap on the interest rates they can charge.
- B.
Can only raise your interest rate for six months if you're late making payments.
- C.
Cannot market to students under 21 years of age at all.
- 9.Which of the following are synonymous (associated) with the term credit score? (check all that apply)
- A.
Credit rating
- B.
Borrowing power
- C.
Credit ranking
- D.
FICO
- 10.Of the following statements about how FICO determines your credit rating, which is true?
- A.
Payment history accounts for 35% of your credit score.
- B.
If you are married, your score will be higher.
- C.
They will ignore one account that is past due as long as others are kept current.
- D.
Those with past “bad” credit can now “piggyback” with relatives with good credit.
- E.
None of the above.
- 11.Which of the following credit reporting agencies do lenders primarily use to determine whether to extend credit to a borrower? (check all that apply)
- A.
Experian
- B.
TransUnion
- C.
CIC Credit
- D.
Equifax
- E.
FDIC
- 12.To improve a credit score, which of the following will help?
- A.
Review your credit report and correct any inaccuracies.
- B.
Close all accounts not in use.
- C.
Apply for new accounts to establish more credit.
- D.
Only charge 80% of your available balance.
- E.
None of the above will help.
- 13.Which of the following options can be used to pay old credit card balances with a new lower interest credit card? (check all that apply)
- A.
Convenience check from the credit card company.
- B.
Cash advance from the new low-interest card.
- C.
Balance transfer form.
- 14.Which of the following statements are TRUE of Credit Counseling Agencies? (check all that apply)
- A.
The government is considering taking away their non-profit status.
- B.
Most receive “kickbacks” of some sort from the credit card companies.
- C.
Most will not work with (or try not to work with) consumers who have lost their jobs.
- D.
Most will not work with (or try not to work with) consumers who have mortgage problems, but no credit card debt.
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