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FHCE Test 3 Questions with Detailed
Verified Answers
Question:Balance owed/Revolving Balance(credit)
Ans: if you carry balance from month to month on your credit card;
compound interest is calculated in revolving credit
Question: Interest rate determining finance charge
Ans: APR interest rate paid over the life of the loan
Question: Teaser rates
Ans: intro rates that attract new customers, can be as low as 0%; most credit
cards compound interest on a monthly basis (APR/12)
Question: Cash advance
Ans: BAD; interest rate begins immediately and may be at a higher rate than
for purchases; usually cash adv fee
Question: Grace period
Ans: 20-25 days excluding cash advances; doesn't apply if you carry a balance;
not all offer this
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Question: Fees
Ans: range $0-100, amex is $300; cash adv fee, late fee $35, over limit fee $35,
2010 Act only $25
Question: Credit Bureau
Ans: collects and reports info from creditors, public court records, and the
consumer; credit scoring
Question: Info on credit report
Ans: personal demographics, employment history, criminal convictions, credit
repayment, previous 2 years of inquiries by creditors
Question: National Credit Reporting Bureau
Ans: equifax credit info services, experian, transunion
Question: 5 C's of Credit: Character
Ans: responsibility toward debt repayment; job stability, homeowner/rental
length; low debt load
Question: 5 C's of Credit: Capacity
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Ans: ability to repay debt; current level/source of income; level of
borrowing(how many lines of credit you have); level of non-obligated income;
debt including mortgage should be less than 36% of income
Question: 5 C's of Credit: Captial
Ans: size of financial holdings: investment, savings, checking, income, assets
Question: 5 C's of Credit: Collateral
Ans: assets or property secured to obtain credit; creditor has title or deed; if
you default asset is sold to repay debt; usually your home, boat, car
Question: 5 C's of Credit: Conditions
Ans: extraneous factors that impact your ability to repay debt:
unemployment rate, discount rate, inflation rate
Question: Consumer Loans Type 1
Ans: single payment(balloon) vs installment(amortized)
Question: amortized
Ans: principle and interest
Question: Consumer Loans Type 2
FHCE Test 3 Questions with Detailed
Verified Answers
Question:Balance owed/Revolving Balance(credit)
Ans: if you carry balance from month to month on your credit card;
compound interest is calculated in revolving credit
Question: Interest rate determining finance charge
Ans: APR interest rate paid over the life of the loan
Question: Teaser rates
Ans: intro rates that attract new customers, can be as low as 0%; most credit
cards compound interest on a monthly basis (APR/12)
Question: Cash advance
Ans: BAD; interest rate begins immediately and may be at a higher rate than
for purchases; usually cash adv fee
Question: Grace period
Ans: 20-25 days excluding cash advances; doesn't apply if you carry a balance;
not all offer this
, Page | 2
Question: Fees
Ans: range $0-100, amex is $300; cash adv fee, late fee $35, over limit fee $35,
2010 Act only $25
Question: Credit Bureau
Ans: collects and reports info from creditors, public court records, and the
consumer; credit scoring
Question: Info on credit report
Ans: personal demographics, employment history, criminal convictions, credit
repayment, previous 2 years of inquiries by creditors
Question: National Credit Reporting Bureau
Ans: equifax credit info services, experian, transunion
Question: 5 C's of Credit: Character
Ans: responsibility toward debt repayment; job stability, homeowner/rental
length; low debt load
Question: 5 C's of Credit: Capacity
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Ans: ability to repay debt; current level/source of income; level of
borrowing(how many lines of credit you have); level of non-obligated income;
debt including mortgage should be less than 36% of income
Question: 5 C's of Credit: Captial
Ans: size of financial holdings: investment, savings, checking, income, assets
Question: 5 C's of Credit: Collateral
Ans: assets or property secured to obtain credit; creditor has title or deed; if
you default asset is sold to repay debt; usually your home, boat, car
Question: 5 C's of Credit: Conditions
Ans: extraneous factors that impact your ability to repay debt:
unemployment rate, discount rate, inflation rate
Question: Consumer Loans Type 1
Ans: single payment(balloon) vs installment(amortized)
Question: amortized
Ans: principle and interest
Question: Consumer Loans Type 2
