FFC Debt and Credit Management 3

Question 1

Which credit scoring factor carries the GREATEST weight in a standard FICO score calculation?

Accepted Answer

Payment history

Answer

Payment history accounts for approximately 35% of a FICO score, making it the single most influential factor.

Question 2

A client with significant unsecured debt is considering Chapter 7 bankruptcy. Which outcome should they expect?

Accepted Answer

Most unsecured debts discharged within a few months

Answer

Chapter 7 bankruptcy is a liquidation process that can discharge most unsecured debts relatively quickly, typically within 3-6 months.

Question 3

What is the primary purpose of a debt management plan (DMP) offered by a nonprofit credit counseling agency?

Accepted Answer

To negotiate reduced interest rates and consolidate payments to creditors

Answer

A DMP consolidates a client's unsecured debt payments and the agency negotiates with creditors for lower interest rates on their behalf.

Question 4

Which statement about credit scores is MOST accurate for a Financial Fitness Coach to share with clients?

Accepted Answer

A score above 740 typically qualifies for the best loan rates

Answer

Scores of 740 and above are generally considered 'very good' to 'exceptional' and qualify consumers for the most favorable interest rates.

Question 5

The statute of limitations on debt refers to:

Accepted Answer

The time period during which a creditor can sue to collect a debt

Answer

The statute of limitations is a state-specific time limit after which a creditor can no longer successfully sue to collect on a debt.

(FFC) Financial Fitness Coach Certification Practice Test