A Consumer Debt Quiz to Test ‘Credit-Ability’
American consumers have been on a borrowing spree. Consumer debt--through credit cards, personal loans, auto loans and the like--has reached record levels.
But how do you stack up with your own personal borrowing habits? Are you a responsible user of credit or are you headed for serious trouble? Do you need to see a credit counselor?
To test your knowledge of credit, gauge your credit habits and encourage you to take corrective action if needed, the Consumer Credit Institute has devised the following “Credit-Ability Scorecard.” The institute is the consumer education arm of the American Financial Services Assn., a trade group of consumer finance firms.
“Many problems that people have with credit is from letting things get out of control and not knowing what lack of control is,” says Frances B. Smith, director of the institute. This self-quiz, by providing some target figures for debt, should help you get control over your finances, she says.
For each question, circle the letter that best describes your credit habits. Be honest!
1. I pay my bills when they are due.
A. Always.
B. Almost always.
C. Sometimes.
2. After paying my regular bills each month, I have money left from my income.
A. Yes.
B. Sometimes.
C. Never.
3. I know how much I owe on my credit cards each month before I receive my bills.
A. Yes.
B. Sometimes.
C. No.
4. When I see a mistake on a credit card bill, I do the following:
A. Write immediately to the creditor, explaining the problem.
B. Call and explain the problem.
C. Wait and see if it is corrected on the next statement.
5. When I need more money for my regular living expenses, I take out a loan or use my line of credit on my credit card or checking account.
A. Never.
B. Sometimes.
C. Often.
6. If I want to see a copy of my credit report, I would contact:
A. A credit reporting agency.
B. My lenders.
C. My lawyer.
7. My credit record shows that I am current on all my loans and charge accounts.
A. Yes.
B. Don’t know.
C. No.
8. I pay more than the minimum balance due on my credit card accounts.
A. Always.
B. Sometimes.
C. Never.
9. To pay off my current credit and charge card accounts, it would take me:
A. Four months or less.
B. Five to eight months.
C. Over eight months.
10. My consumer loans (including auto loans but not mortgage payments) and credit card bills each month average more than 20% of my monthly take-home pay.
A. No.
B. Sometimes.
C. Always.
11. If I would have serious credit problems, I would probably:
A. Contact my creditors or get outside help.
B. Hope to catch up.
C. Ignore the bills and notices.
12. If I default (don’t repay) on a loan, that fact can stay on my credit report for:
A. Seven years.
B. Three years.
C. One year.
For scoring, please see D4
Bill Sing welcomes readers’ comments and suggestions for columns but regrets that he cannot personally answer letters and phone calls. Write to Bill Sing, Personal Finance, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.
Scoring for Credit Quiz
Scoring of credit quiz: Give yourself 3 points for each “A” answer, 2 points for each “B” answer and 1 point for each “C” response.
If you scored:
31-36: You have an excellent knowledge of credit and its responsible use.
24-30: You should take steps toward a better understanding of your personal finances and of the credit process.
18-23: You probably need to take a serious look at your personal finances; consider controlling your spending and keeping a tight budget.
12-17: You may be heading for serious trouble; consider seeking help, such as nonprofit consumer credit counseling services.
