HDF 322Exam #2Study GuideExam PreparationThere will be between 40-50 multiple choice, True/False Questions. (2 bonus questions)Remember you can have ahalf sheet ofpaper with handwrittennotes (front and back) for this exam.You will also want to have a calculator.Book preparation:The following Chapters will be on the Exam:Chapter 5: Managing CreditChapter 6: Making Automobile and Housing DecisionsChapter 7: Insurance Principles & Home and Auto InsurancesThe textbook exam questions (10-20% of the exam) will all come from:The concept questions intermingled within the readings.The quiz questions (Weekly Canvas Modules)PowerPoints & Homework PreparationSee questions in the study guide for those questions (below)Review the Auto and Home Insurance Homework (the other homeworks were completion)CreditWhat is considered to be consumer credit? Credit used to buy things for yourself like credit cards, car loans and student loansHow has consumer credit spending been changing in America? (general trend)Total household debt has doubled, mainly from mortgages. Total debt has gone down since 2008 but is coming back up because of student loans, which has quadrupled since 2003On average how much more do people tend spend when using credit vs. cash? People spend 10-20% more with credit, some people even willing to pay doubleAccording to Dr. Pope you should NEVER PAY the minimum balance on your credit card. What are the 5 c’s creditors look for in a borrower? (know what they mean)Capacity – Can you pay back with your incomeCapital – How much is your house worth/your other assetsCollateral – Do you have stuff they can take from you if you defaultCharacter – are you a responsible personConditions – Specific individual factors What are the 3 credit reporting agencies? What are their functions? Equifax, Experian, and Trans Union They collect information from banks, etc. and use models to quantify your creditworthiness What is the federally endorsed URL for getting a free credit report? Annualcreditreport.comHow often can you check your credit report at each of the credit reporting agencies for free?
Once per year for each providerCan you withhold payments on credit cards for damaged products and poor services? YesWhat are is a FICO score? Scoring system used to quantify your creditworthiness 350-800. What factors contribute to a FICO score? (which two factors contribute the most to FICO score?)-Length of credit history-Payments history **-Amounts owed **-Types of credit used-New creditWhat does it mean to freeze your credit reports? When can this be done free of charge?Freeze = restrict access to credit report so identity thieves can’t get to it; this is done for free when someone has taken a loan in your name or you have been hackedIf your credit card is lost or stolen and then used, what is your liability?
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