April is National Financial Literacy Month and a good reminder of how important it is to be financially literate. It's especially key if you're thinking about buying a home.
Take our short quiz, with questions from our 12–module CreditSmart® program, to see how your financial knowledge stacks up.
- Late payments can stay on your credit report for __ years.
Answer: Seven
Late payments will stay on your credit report for seven years. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
- How much money should I save for an emergency fund?
Answer: Six months of living expenses
The general rule of thumb is to have enough savings to cover six months of living expenses. To learn more, visit CreditSmart's Module 2: Managing Your Money.
- Which item below is not included in your credit report?
Answer: Your income
Credit reports do not take your income into account. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
- You decide to buy a new $2,200 plasma TV. You take advantage of the store's special offer to receive an additional 10% off if you open the store credit card with an 18% Annual Percentage Rate (APR). If you make your minimum monthly payments of $50, how much will your TV ultimately cost once paid in full? (You may want to get your calculator out!)
Answer: $3,026.84
You will have paid $1,046 in interest charges over the course of 5.1 years, bringing the real cost of your TV to $3,026.84. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
- If you co-sign a car loan for your son, is your credit rating affected if he is late or misses a payment?
Answer: Yes
As a cosigner, the loan obligation and your son's payment history will be part of your credit report. If your son is late or misses any payments, your credit score will be affected. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
- You can be denied a loan because you are not married.
Answer: False
The Equal Credit Opportunity Act prohibits a person from being denied credit based on race, gender, national origin, marital status and receipt of public assistance. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
- If there are errors on your credit report that you've reported to the credit reporting agency, they must take steps to investigate the disputed items.
Answer: True
The credit reporting agency must investigate disputed items within 30-45 days and provide you written notice of the results. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
- For how long will a lender typically lock-in your mortgage rate before you buy your house?
Answer: 1-3 months
A lock-in, also called a rate-lock or rate commitment, is a lender's promise to hold a certain interest rate and points for you, usually for one to three months while your loan application is processed.
- What are the four primary factors – often referred to as the "4-Cs" – that lenders use to determine a person's creditworthiness?
Answer: credit, capital, collateral, capacity
The correct 4-Cs are credit, capital, collateral, and capacity. To learn more, visit CreditSmart's Module 7: Thinking Like a Lender.
- How often should you check your credit report?
Answer: Once a year
You should check your credit report on an annual basis to ensure there are no errors and to see if there have been any attempts to steal your identity. You can get a copy of your credit report from www.annualcreditreport.com. To learn more, visit CreditSmart's Module 5: Establishing and Maintaining Good Credit.
There is no better time than now to brush up on your financial education and life–long money management skills.
Our CreditSmart® program is your guide to better credit, money management, and responsible homeownership. Taking this 12–module course online, or in a class led by a HUD–approved housing counselor, will help you:
- Gain insight into how lenders assess your eligibility for a mortgage loan
- Recognize the warning signs of predatory lending and scams
- Learn the steps to successful homeownership
- Safeguard your home and your finances against life's unexpected challenges
- Learn what to do if you ever have difficulty making your mortgage payments
Visit My Home by Freddie Mac® to learn all you need to know about the homebuying process and be sure to follow our Spring Homebuying blog series.
