FiCEP Fundamentals 5

Question 1

Which of the following is considered a 'secured' debt?

Accepted Answer

Auto loan

Answer

An auto loan is secured by the vehicle as collateral, which the lender can repossess if the borrower defaults.

Question 2

What is the role of the Consumer Financial Protection Bureau (CFPB)?

Accepted Answer

To regulate and supervise financial products and protect consumers

Answer

The CFPB is a federal agency that enforces consumer financial protection laws and oversees financial products and services.

Question 3

A client's spending plan shows consistent monthly shortfalls. What is the first counseling step?

Accepted Answer

Analyze income and expenses to identify areas for adjustment

Answer

Identifying the root cause of budget shortfalls requires a detailed review of both income sources and spending categories.

Question 4

What is 'credit utilization ratio' and what level is generally recommended?

Accepted Answer

Revolving credit used divided by total revolving credit limit; below 30%

Answer

Credit utilization is the percentage of revolving credit in use, and keeping it below 30% supports a healthy credit score.

Question 5

Which document provides a detailed record of a consumer's borrowing and repayment history?

Accepted Answer

Credit report

Answer

A credit report contains account history, payment records, public records, and inquiries compiled by credit bureaus.

FiCEP - Financial Counseling Certification Program Practice Test