Credit Score basics
What is credit score?
A numerical representation of a person's creditworthiness
How often should you check your credit score?
At least once a year
What does a "thin credit File" mean?
Having a limited credit history with few credit accounts.
Why is it important to build credit history from a young age?
It helps establish a track record for lenders to evaluate.
When is it a good idea to borrow money?
When you can repay it responsibly and its for something that will benefit your financial situation.
Name the five components that make up a credit score.
Payment history, amounts owed, length of credit history, new credit and types of credit used.
True or False: Checking your own credit report will lower your credit score.
False
True or False: A thin credit File can make it harder to get loans.
True
True or False: Opening multiple new credit accounts at once can help build your credit quickly.
False
True or False: Its okay to max out your credit card if you plan to pay it off next month?
False
Which component of a credit score has the highest impact?
Payment history
What is one way to improve your credit score?
Pay bills on time
What might lenders do if you have a thin credit File?
What is one way to start building credit history?
Use a secured credit card or get a small loan.
What should you consider before taking out a loan?
Your ability to repay it and loan's interest rate.
How does a high credit utilization rate affect your credit score?
It can lower your credit score
How can paying off debt improve your credit score?
It lowers your credit utilization rate.
Name one consequence of having a thin credit File.
Difficulty in getting approved for loans or credit cards
How does the length of credit history affect your credit score?
A longer credit history can positively impact your score.
Name a good reason to use a credit card.
Building credit or earning rewards
If your credit card limit is 10,000 and you have a balance of 2,500, what is your credit utilization rate?
25%
Why is it important to correct errors on your credit report?
Errors can negatively impact your credit score
How can you build your credit if you have a thin credit File?
Use a secured credit card or become an authorized user on someone else's account.
Why should you avoid closing old credit accounts?
It can shorten your credit history and potentially lower your score
What is the impact of borrowing too much?
It can lead to high debt and lower your credit score