FiCEP Credit Reports and Scoring 5

Question 1

A client wants to build credit from scratch. Which option is MOST appropriate for someone with no credit history?

Accepted Answer

Open a secured credit card

Answer

A secured credit card requires a cash deposit as collateral, making it accessible for people with no credit history while helping build a positive payment record.

Question 2

Which federal law gives consumers the right to obtain one free credit report from each bureau annually?

Accepted Answer

Fair and Accurate Credit Transactions Act (FACTA)

Answer

FACTA amended the FCRA to require the three major credit bureaus to provide consumers one free credit report per year via AnnualCreditReport.com.

Question 3

A client is 60 days past due on a credit card. How will this likely affect their FICO score compared to a 30-day late payment?

Accepted Answer

A 60-day late payment has a significantly greater negative impact

Answer

The severity of late payment derogatory marks increases with the number of days past due; a 60-day late is more damaging than a 30-day late.

Question 4

What is the primary difference between a credit report and a credit score?

Accepted Answer

A credit report is a detailed history of credit activity; a credit score is a numerical summary derived from that data

Answer

A credit report is a detailed record of a consumer's credit history, while a credit score is a three-digit number calculated using data from the credit report.

Question 5

A client with multiple unpaid medical collections learns that FICO Score 9 treats medical debt differently. What is the key difference?

Accepted Answer

FICO Score 9 ignores paid medical collections and gives less weight to unpaid ones

Answer

FICO Score 9 ignores paid medical collection accounts and gives less weight to unpaid medical collections compared to other types of unpaid collections.

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP Credit Reports and Scoring 5