Credit Score
Does checking my own credit score hurt it?
No. Checking your own score is a "soft inquiry," which does not impact your score. Only "hard inquiries" (when lenders check your credit when you apply for credit) can affect it.
What is the "Pay Yourself First" method?
Soft Inquiry
A check of your credit report that does not affect your score, such as checking your own score.
The original amount of money borrowed on a loan, not including interest.
The Principal
What is a tax bracket?
A tax bracket is a range of income levels taxed at specific, progressively higher rates.
What is the most important factor in a credit score?
Payment History. Consistently paying your bills on time has the largest positive impact.
What is the 50/30/20 rule?
A budgeting strategy where 50% of income goes to Needs, 30% to Wants, and 20% to Savings and debt repayment.
Hard Inquiry
A record of when a lender checks your credit report for a credit decision, which can temporarily lower your score.
This term refers to the extra money you pay a lender for the privilege of borrowing money.
Interest
If a single person and a married couple (filing jointly) both have a taxable income of $65,000, who would pay a higher income tax?
A married couple
If I get married, do I share a credit score with my spouse?
No. You maintain your own independent credit history, even after marriage. Only joint accounts show up on both reports.
How much should I save from my paycheck?
A common goal for beginners is to aim for at least 20% of your take-home pay.
Delinquency
Failure to make a payment by the due date; this negatively impacts your score.
This is the word used to describe the length of time you have to repay a loan.
The term
Explain the difference between the common misconception that people might have about how tax brackets work and how they actually work.
You’re taxed on your full earning but there is a dedication that decreases your taxable income.
Should I close unused credit cards?
Not necessarily. Closing accounts reduces your total available credit, which can raise your credit utilization ratio and lower your score.
What is the difference between a need and a want?
Needs are essentials like food and shelter, while wants are things you desire but could live without, like a new video game or designer clothes.
FICO Score
The most common credit scoring model, ranging from 300 to 850, used by most lenders.
This term refers to something of value (like a car or house) pledged to the lender to guarantee a loan will be repaid.
Collateral
Describe the relationship between income levels and marginal tax rates.
The relationship between income levels and marginal tax rates is that as income increases, the marginal tax rate may also increase.
How much of my credit limit should I use?
It is best to keep your credit utilization—the amount you owe compared to your limit—below 30%.
What is an emergency fund?
A dedicated pool of money set aside specifically for unexpected expenses, like car repairs or sudden job loss, to avoid using credit cards.
Credit
Credit is a contractual agreement where a borrower receives something of value (money, goods, or services) immediately from a lender, agreeing to repay the debt later, usually with interest and fees.
Failing to make required payments on a loan is known by this term.
A Default
What is the marginal tax rate for a single filer with $75,000 taxable income?
22%