NAFCU NCCO EXAM QUESTIONS AND 100% VERIFIED
ANSWERS
255 QUESTIONS AND ANSWERS
1. Q: What is the primary purpose of a federal credit union? A: To promote
thrift among its members and create a source of credit for provident or
productive purposes.
2. Q: Who regulates federal credit unions? A: The National Credit Union
Administration (NCUA).
3. Q: What is the fundamental difference between a credit union and a
bank? A: Credit unions are member-owned, not-for-profit cooperatives, while
banks are for-profit institutions owned by shareholders.
4. Q: What does "field of membership" mean? A: The definition of who is
eligible to join a particular credit union based on common bond requirements.
5. Q: What are the three types of common bonds for credit union
membership? A: Occupational, associational, and residential (community).
6. Q: What is the maximum amount the NCUA can insure per member? A:
$250,000 per member, per federally insured credit union.
7. Q: Who makes up a credit union's board of directors? A: Volunteer
members elected by the membership.
8. Q: What is the supervisory committee's primary responsibility? A: To
ensure the safety and soundness of the credit union and protect members'
interests.
9. Q: What is the minimum number of members required to form a federal
credit union? A: Seven members.
10. Q: What does FCU stand for? A: Federal Credit Union.
11. Q: What is the primary source of income for credit unions? A: Interest
income from loans and investments.
,12. Q: What is a credit union's net worth? A: The difference between total
assets and total liabilities, representing members' ownership.
13. Q: What is the purpose of the credit union philosophy "People Helping
People"? A: To emphasize the cooperative nature and member service focus of
credit unions.
14. Q: What is a share account? A: A savings account at a credit union,
representing the member's ownership stake.
15. Q: What is the minimum share purchase required for membership? A:
Typically $5-$25, as specified in the credit union's bylaws.
16. Q: What is NCUSIF? A: National Credit Union Share Insurance Fund,
which insures member deposits.
17. Q: What is the difference between a state and federal credit union? A:
Federal credit unions are chartered by NCUA; state credit unions are chartered
by state agencies.
18. Q: What is a credit union's charter? A: The legal document that
establishes the credit union as a corporation.
19. Q: What is the role of a credit union's CEO/President? A: To manage
daily operations and implement policies set by the board of directors.
20. Q: What is the maximum loan term for most credit union loans? A:
Varies by loan type, but generally up to 15 years for personal loans, 30 years for
mortgages.
21. Q: What is a credit union's loan-to-share ratio? A: The percentage of
total loans outstanding compared to total shares (deposits).
22. Q: What is the purpose of the annual meeting? A: To conduct official
business, elect directors, and report to members.
23. Q: What is a credit union's primary obligation to members? A: To
provide financial services at competitive rates while maintaining safety and
soundness.
24. Q: What is the maximum interest rate a federal credit union can pay on
deposits? A: There is no federal limit; rates are set by the board of directors.
25. Q: What is a credit union's field of membership expansion? A: The
process of adding new groups to the credit union's charter.
, 26. Q: What is the difference between a PAR and a charge-off? A: PAR
(Past Due and Reprocess) loans are delinquent but still collectible; charge-offs
are loans deemed uncollectible.
27. Q: What is the purpose of loan loss reserves? A: To cover potential losses
from loans that may not be repaid.
28. Q: What is a credit union's capital adequacy ratio? A: The ratio of net
worth to total assets, measuring financial strength.
29. Q: What is the role of CUNA? A: Credit Union National Association
provides advocacy, education, and services to credit unions.
30. Q: What is the cooperative principle in credit unions? A: Democratic
member control, member economic participation, and concern for community.
Section 2: Regulatory Compliance (Questions 31-80)
31. Q: What is the Truth in Lending Act (TILA)? A: Federal law requiring
disclosure of credit terms and costs to borrowers.
32. Q: What is the Annual Percentage Rate (APR)? A: The yearly cost of
credit expressed as a percentage, including interest and fees.
33. Q: What is Regulation Z? A: Federal Reserve regulation implementing the
Truth in Lending Act.
34. Q: What is the right of rescission? A: The borrower's right to cancel
certain credit transactions within three business days.
35. Q: What is the Equal Credit Opportunity Act (ECOA)? A: Law
prohibiting discrimination in credit transactions based on protected
characteristics.
36. Q: What is Regulation B? A: Federal regulation implementing the Equal
Credit Opportunity Act.
37. Q: What are the protected classes under ECOA? A: Race, color, religion,
national origin, sex, marital status, age, and receipt of public assistance.
38. Q: What is the Fair Credit Reporting Act (FCRA)? A: Law governing
the collection, dissemination, and use of consumer credit information.
39. Q: What is the Fair Debt Collection Practices Act (FDCPA)? A: Law
regulating debt collection practices to eliminate abusive collection methods.
40. Q: What is the Electronic Fund Transfer Act (EFTA)? A: Law
establishing rights and liabilities related to electronic fund transfers.
ANSWERS
255 QUESTIONS AND ANSWERS
1. Q: What is the primary purpose of a federal credit union? A: To promote
thrift among its members and create a source of credit for provident or
productive purposes.
2. Q: Who regulates federal credit unions? A: The National Credit Union
Administration (NCUA).
3. Q: What is the fundamental difference between a credit union and a
bank? A: Credit unions are member-owned, not-for-profit cooperatives, while
banks are for-profit institutions owned by shareholders.
4. Q: What does "field of membership" mean? A: The definition of who is
eligible to join a particular credit union based on common bond requirements.
5. Q: What are the three types of common bonds for credit union
membership? A: Occupational, associational, and residential (community).
6. Q: What is the maximum amount the NCUA can insure per member? A:
$250,000 per member, per federally insured credit union.
7. Q: Who makes up a credit union's board of directors? A: Volunteer
members elected by the membership.
8. Q: What is the supervisory committee's primary responsibility? A: To
ensure the safety and soundness of the credit union and protect members'
interests.
9. Q: What is the minimum number of members required to form a federal
credit union? A: Seven members.
10. Q: What does FCU stand for? A: Federal Credit Union.
11. Q: What is the primary source of income for credit unions? A: Interest
income from loans and investments.
,12. Q: What is a credit union's net worth? A: The difference between total
assets and total liabilities, representing members' ownership.
13. Q: What is the purpose of the credit union philosophy "People Helping
People"? A: To emphasize the cooperative nature and member service focus of
credit unions.
14. Q: What is a share account? A: A savings account at a credit union,
representing the member's ownership stake.
15. Q: What is the minimum share purchase required for membership? A:
Typically $5-$25, as specified in the credit union's bylaws.
16. Q: What is NCUSIF? A: National Credit Union Share Insurance Fund,
which insures member deposits.
17. Q: What is the difference between a state and federal credit union? A:
Federal credit unions are chartered by NCUA; state credit unions are chartered
by state agencies.
18. Q: What is a credit union's charter? A: The legal document that
establishes the credit union as a corporation.
19. Q: What is the role of a credit union's CEO/President? A: To manage
daily operations and implement policies set by the board of directors.
20. Q: What is the maximum loan term for most credit union loans? A:
Varies by loan type, but generally up to 15 years for personal loans, 30 years for
mortgages.
21. Q: What is a credit union's loan-to-share ratio? A: The percentage of
total loans outstanding compared to total shares (deposits).
22. Q: What is the purpose of the annual meeting? A: To conduct official
business, elect directors, and report to members.
23. Q: What is a credit union's primary obligation to members? A: To
provide financial services at competitive rates while maintaining safety and
soundness.
24. Q: What is the maximum interest rate a federal credit union can pay on
deposits? A: There is no federal limit; rates are set by the board of directors.
25. Q: What is a credit union's field of membership expansion? A: The
process of adding new groups to the credit union's charter.
, 26. Q: What is the difference between a PAR and a charge-off? A: PAR
(Past Due and Reprocess) loans are delinquent but still collectible; charge-offs
are loans deemed uncollectible.
27. Q: What is the purpose of loan loss reserves? A: To cover potential losses
from loans that may not be repaid.
28. Q: What is a credit union's capital adequacy ratio? A: The ratio of net
worth to total assets, measuring financial strength.
29. Q: What is the role of CUNA? A: Credit Union National Association
provides advocacy, education, and services to credit unions.
30. Q: What is the cooperative principle in credit unions? A: Democratic
member control, member economic participation, and concern for community.
Section 2: Regulatory Compliance (Questions 31-80)
31. Q: What is the Truth in Lending Act (TILA)? A: Federal law requiring
disclosure of credit terms and costs to borrowers.
32. Q: What is the Annual Percentage Rate (APR)? A: The yearly cost of
credit expressed as a percentage, including interest and fees.
33. Q: What is Regulation Z? A: Federal Reserve regulation implementing the
Truth in Lending Act.
34. Q: What is the right of rescission? A: The borrower's right to cancel
certain credit transactions within three business days.
35. Q: What is the Equal Credit Opportunity Act (ECOA)? A: Law
prohibiting discrimination in credit transactions based on protected
characteristics.
36. Q: What is Regulation B? A: Federal regulation implementing the Equal
Credit Opportunity Act.
37. Q: What are the protected classes under ECOA? A: Race, color, religion,
national origin, sex, marital status, age, and receipt of public assistance.
38. Q: What is the Fair Credit Reporting Act (FCRA)? A: Law governing
the collection, dissemination, and use of consumer credit information.
39. Q: What is the Fair Debt Collection Practices Act (FDCPA)? A: Law
regulating debt collection practices to eliminate abusive collection methods.
40. Q: What is the Electronic Fund Transfer Act (EFTA)? A: Law
establishing rights and liabilities related to electronic fund transfers.
