Vocab
the ability to borrow money with the promise that you'll repay it in the future, often with interest
What is credit?
How many times should you check your credit report each year?
What is at least 1 time per year?
What are the 3 Cs of credit worthiness?
What is character, capital, and capacity?
What is the range for credit scores?
What is 300-850?
Give an example of installment credit.
Any loan
THE AMOUNT you OWE for charges on a credit card, charge card, or for money you've received through a loan.
What are the 4 sections on a credit report?
Identifying info
Accounts/credit
Public records
Inquiries
Salary/current job
Expenses and debt
Kids/dependents
These things describe this C of creditworthiness
What is capacity?
What is a credit score?
It is a number that tells how financially responsible you are at any given time. the higher the number the better.
What is the difference between secured and unsecured credit?
Secured credit is something the bank could take from you if you are not making payments-a car, home, farm
Unsecured the bank has no collateral-student loans
Able to use the credit card account but is not legally liable for the balance due on the account
What is an authorized user?
Daily double: How long do late payments stay on your credit report?
What is 7 years?
Having a good credit report and previously using credit is this C of creditworthiness.
What is character?
What 5 items affect your credit score? Star the one that make the largest impact.
Payment History *
Amount Owed
Length of Credit History
New lines of Credit
Mix of Credit
True or false: Only paying my minimum payment for my credit card balance has a NEGATIVE impact on your credit score.
False
The maximum dollar amount that can be charged on a specific credit card account.
What is a credit limit?
How long does the good stuff stay on a credit report?
What is forever?
How can someone build their credit history? (list 3 things, this is different than improving a credit score!)
Apply for a small loan using your savings account as collateral.
Get a co-signer on a loan and pay back the loan as agreed.
Apply for a credit card
Become an authorized user on a parent’s credit card
Open a savings account and make regular deposits
Establish a steady work history
List 2 things that have negative impacts on your score. List 2 completely different things that can have positive impacts on your score. List 2 things that have no impact.
Neg: paying late, using more than 30% of available credit limits, maxing out credit cards every month, high balances, applying for a lot of credit in short amount of time
Positive: paying bills on time, using less than 30% available credit, mixing up the time of credit you have, having credit and using it responsibly, having a long history of being responsible
None: pets, marriage, kids, divorce, promotions, graduating
Look at the credit report Ms. Vargas gave. This person is really wanting to go on a mini vacation for $700, can they charge it to their credit card? Explain.
No, they only have $215.47 available credit left
A person who promises to pay the debt of another person
What is a cosigner?
Where should you go to get your FREE copy of your credit report?
what is AnnualCreditReport.com ?
No, if you are a cosigner you already have a history. To start to build a history you could GET a cosigner. Someone that will vouch for you and take over the responsibility if you can't.
What does a score of 598 tell you about someone's financial credibility? What are disadvantages to this score? Be detailed in your answer.
This tells me the person is not financially responsible. They may pay things late, have high balances. They will miss out on jobs, have high interest rates if they get a loan or credit card. May need a cosigner.
Look at the credit report Ms. Vargas gave you.
How much would you pay in interest making only the minimum payment each month?
$1499.47