Financial Literacy Test

How much money should you put into savings every month?

$1,000

2% of each paycheck

10% of each paycheck

All leftover cash at the end of the month

How much of your income should be used on monthly credit card payments?

The same amount that you save each month

As much as it takes to pay off your debts in full

No more than 10% of your monthly take-home pay

No more than 30% of your monthly take-home pay

What’s the maximum debt-to-income ratio a person can have and still qualify for a mortgage?

27%

43%

50%

DTI doesn’t apply if you make a lot of money

How often can you check your credit report for free?

Once a week

Once every six months

Once every other year

Never. You have to pay each time

How much money do you need for a down payment on a traditional mortgage?

At least $20,000

One year’s salary

At least 20% of the purchase price

5% of the amortization on the loan

What does APR stand for?

Annual penalty rate

Annual percentage rate

Applied percentage rate

Acutely painful responsibilities

How is net worth calculated?

(Assets) – (Liabilities)

(Yearly income) / (Age)

(Yearly Income) – (Debt)

(Credit score) x (Income)

How soon should you check your credit prior to a major purchase?

The day before making the purchase

6 weeks before making the purchase

6 months before making the purchase

1 year before making the purchase

How many payments are typically needed before penalty APR can be removed?

6 on-time payments in a one-year period

6 that are more than the minimum payment amount

At least 6 consecutive on-time payments

Penalty APR can never be removed once applied

What are the 3 C’s of credit worthiness?

Capacity, character, collateral

Capital, credit cards, checking accounts

Confidence, compatibility, credibility

Charge offs, credit score, costs

What are the three types of expenses in a budget?

Flexible, Floating, Fixed

Wants, Needs, Bills

Fixed, Flexible, Discretionary

Pay now, pay next month, pay upon death

What kind of credit card can you get with bad credit or no credit score?

Any, as long as you can find a cosigner

Secured

Remedial

Probationary

What federal law protects your rights from abusive collection tactics?

Fair Credit Reporting Act (FCRA)

Collection Abuse Litigation Law (CALL)

Fair Debt Collection Practices Act (FDCPA)

Abuse Standards Infraction Filing (ASIF)

How long does it take for an account to go to collections?

30 days of nonpayment

6 months of nonpayment

1 year of nonpayment

It depends on the lender

What are the names of the three big credit bureaus in the U.S.?

Experian, Equifax, TransUnion

Visa, MasterCard, AMEX

Wells Fargo, TD, Bank of America

Volcker, Greenspan, Bernake

What are the two types of personal bankruptcy filings you can make?

Filtered and Unfiltered

Chapter 9 and Chapter 11

Fixed and Revolving

Chapter 7 and Chapter 13

How long do credit inquiries affect your credit score?

Forever

About five years

About 6 months

Until you open a new line of credit

What’s the retirement plan that you get through your employer called?

Roth IRA

401(k)

Traditional IRA

Social Security

What debts cannot be discharged by bankruptcy?

Student loans

Child support / Alimony

Court judgments

All the above

Which factors are used to calculate credit score?

Amount owed, highest interest rate, number of cards, delinquencies, overages

Gross income, number of cards, payment history, penalties, savings

Nice smile, winning attitude, promise to be more responsible, personal references, having a job

Payment history, credit utilization, new applications, credit age, types of credit