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25 Cards in this Set
- Front
- Back
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The item of value that backs a secured loan is called
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collateral
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The process of reviewing a loan for soundness is called
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underwriting
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This right allows a consumer to change his or her mind about a loan until midnight of the third business day following the signing of papers.
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rescission
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These are records of all who have requested a copy of a credit report within the last year.
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Inquiries
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A legal claim a lender has on property to secure a debt is called
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a lien
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Personal loans do not require that a specific purpose be stated.
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True
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Secured loans are sometimes called signature loans.
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False
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The amount a borrower pays to use the principal of a loan is called a fee.
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False
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A baloon payment is a single large payment due at the end of a loan.
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True
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Subprime rates are higher-than-normal interest rates offered to a less-than-perfect credit applicant.
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True
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If a credit applicant has opened many new accounts recently, that is probably a sign that the applicant is very creditworthy.
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Fasle
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Paying off a loan early saves the consumer no money if the sum-of-digits method has been used to figure finance charges.
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True
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One consequence of credit overextension is a ruined credit rating.
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True
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High consumer debt is good for banks, because banks make most of their money from the interest paid on loans.
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False
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The Truth in Lending Act prohibits bill collectors from using deceptive or abusive tactics.
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False
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Which of the following statements is NOT true?
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Credit bureaus may not report information more than one year old.
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Documentation of most credit problems stays in a consumer's file for at least
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seven years
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Which of the following attempts to protect the information that credit bureaus may collect?
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Fair Credit Reporting Act
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This finance charge method takes the total finance charge, divides it by the number of months in the loan term, and assigns a higher ratio of interest to the early payments.
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sum-of-digits method
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Which of the following elements of the FICO credit-scoring system carries the mst weight?
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payment history
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Which of the following shows the steps of the credit-approval process in proper order?
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application, documentatio, processing, underwriting, closing, funding
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Which of the following statements about open-end loans is true?
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The longer you use the money, the more you pay.
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Which of the following interest rates is linked to some other rate?
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indexed rate
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All of the following are considered installment loans except
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lines of credit
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A home equity loan is essentially a second
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mortgage
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