Credit Basics
This three-digit number tells lenders how likely you are to repay money you borrow.
What is a credit score?
This fee is charged annually for simply owning certain credit cards
What is an annual fee?
You owe $500 on a credit card with a 20% APR. If you only pay $50 this month, this is the amount left before interest is added.
What is $450?
You have a credit limit of $1,500 and use $150. This low utilization rate helps your score.
What is 10%?
(150 / 1,500)
This type of credit allows you to borrow repeatedly up to a limit—like a credit card.
What is revolving line of credit?
This summary includes your credit history, payment records, and accounts
What is a credit report?
This rate determines how much interest you pay on unpaid balances.
What is APR (Annual Percentage Rate)?
If your card has a $1,000 limit and you’ve used $400, this is your credit utilization percentage.
What is 40%?
If a lender checks your credit for a loan, this type of inquiry may temporarily lower your credit score.
What is new credit inquiry?
A loan uses something valuable in case you don’t pay.
What is a collateral?
The US’s top 3 credit bureaus that track an individuals’s credit information
What is Equifax, Experian, and TransUnion?
This is the best way to avoid paying interest on credit card purchases.
Paying off the full balance on the credit card each month
Your APR is 18%, and your monthly interest rate is this.
What is 1.5%?
Paying your credit card on time every month improves this part of your credit score, which makes up the largest percentage.
What is payment history?
This allows you to write a paper check that will be charged against your credit
What is a convenience check?
This is the maximum amount a credit card company allows you to borrow.
What is a credit limit?
This happens when you spend more than your credit limit.
Card is automatically declined; and in some cases, charges an over-the-limit fee
You owe $800. You pay $200. This is your remaining balance (before interest).
What is $600?
A student pays a bill 30 days late. This is how long a late payment can stay on their credit report.
What is 7 years?
What is a periodic rate?
Talk about the difference between credit score and a credit report.
A credit score is a three-digit number that indicates how well a person can repay back the money borrowed. Whereas a credit report is a summary of a person’s credit background which includes their payment history, extent of their credit history, capacity, and diversification on credit.
Paying only this amount each month costs more over time because interest builds up.
What is minimum payment?
You buy sneakers for $120. Your credit card charges a 25% APR. The approximate finance charge for one month is this much.
What is $2.50?
(25% ÷ 12 ≈ 2.08% → $120 × 0.0208 ≈ $2.50)
You have three credit card balances: $200, $500, and $300. Your total credit limit is $2,000. This is your overall utilization percentage.
What is 50%?
(200 + 500 + 300 = 1,000 used; 1,000 ÷ 2,000 = 50%)
You have four credit cards with the following balances and limits:
This is your overall credit utilization percentage.
Total balance = 350 + 420 + 180 + 0 = $950
Total credit limit = 1,000 + 1,500 + 800 + 700 = $4,000
Utilization = 950 ÷ 4,000 = 0.2375 → 24% (rounded) or 23.75% exact