AFC Credit and Debt Management 2

Question 1

A client's credit report shows a collection account for $1,200 that is four years old. What should the counselor advise regarding the statute of limitations?

Accepted Answer

Verify the statute of limitations in the client's state before taking any action

Answer

Pay the collection immediately to improve the credit score

Answer

Dispute the account as too old to be valid

Answer

Ignore the collection since it will fall off in three years

Question 2

Which credit scoring factor has the greatest weight in the FICO scoring model?

Accepted Answer

Payment history

Answer

Credit utilization ratio

Answer

Length of credit history

Answer

Credit mix

Question 3

A client wants to dispute an inaccurate item on their credit report. Under the Fair Credit Reporting Act, the credit bureau must investigate within how many days?

Accepted Answer

30 days

Answer

15 days

Answer

45 days

Answer

60 days

Question 4

What is the recommended credit utilization ratio to maximize a client's credit score?

Accepted Answer

Below 10%

Answer

Below 30%

Answer

Below 50%

Answer

Below 75%

Question 5

A client is considering enrolling in a debt management plan through a credit counseling agency. Which of the following is a typical feature of these plans?

Accepted Answer

Creditors may agree to reduced interest rates and waived fees

Answer

Debts are forgiven after completing the plan

Answer

The client's credit score immediately improves upon enrollment

Answer

All types of debt including student loans and mortgages are eligible

Question 6

Which federal law protects consumers from abusive debt collection practices, including limits on when and how collectors can contact them?

Accepted Answer

Fair Debt Collection Practices Act

Answer

Truth in Lending Act

Answer

Equal Credit Opportunity Act

Answer

Consumer Credit Protection Act