Credit basics
What does credit mean?
Borrowing money now and paying it back at a later time
What type of credit lets you borrow again after paying it off?
Open Credit
What is a credit score?
A 3 digit number ranging from 300-850 based on the persons credit history and shows how trustworthy the person is.
Paying the bills on time- Smart or Risky???
Smart
Miss a payment often?
your score drops
Who gives out credit?
Lenders like banks or credit card companies
Paying a phone bill after using it is what type of credit?
Service Credit
An important factor in a credit score?
A person's payment history
Maxing your credit card- Smart or Risky???
Risky!!! it raises your utilization.
What does it mean to default on a loan?
Stop paying completely.
Name a reason why someone might use credit?
To buy a car or pay for college
Fixed monthly payments until the loan is payed fully is?
Installment Credit
Whats a credit report?
detailed record of your credit accounts, payments and balances.
Only paying the minimum payment each month?
Risky! it keeps you in debt
how does bad credit affect you?
Being denied to buy a car or house and paying higher interest rates.
A main cost of using credit?
Paying interest
Best type of credit to build up you credit score over time?
Credit Cards
What is considered a good credit score range?
670-740 or higher
Checking your credit report?
Smart, it doesn't hurt your score to check from time to time.
One long term benefit of having a good credit score?
Easy approvals for loans apartments or jobs.
Difference between good and bad credit?
Good credit shows your responsible and be able to pay the borrowed money back, lower interest rate
Bad Credit shows risks, not trusted to pay back the money, and a high interest rate
What is one main difference between installment credit and open credit?
Installment is fixed payments meanwhile Open is a flexible balance and limit.
2 additional factors that affect your credit score?
Amount owed, Length of credit history, new credit.
Opening lots of credit cards in a short time span?
Risky! way to many hard inquiries will lower your score.😬
Your debt goes to collections?
Collection agency tries to get your money, and your score drops