Basics of Credit
What is a credit score?
A numerical expression based on a level analysis of a persona's credit files, to represent the creditworthiness of an individual.
Why it is important to build a credit history from a young age?
It shows that you are responsible with credit, and makes lenders more likely to extend credit in the future.
How often should you check your credit score?
Once a year minimum.
How does a person's credit determine their ability to borrow?
It tells lenders the risk of lending to them.
What are the 5 components that make up a credit score?
Payment history (35%), amount owed (30%), length of credit history (15%), new credit (10%), credit mix (10%)
How do you build and improve your credit score?
Paying credit balances strategically, paying bills on time, not getting close to your credit limit.
How often should you check your credit history?
What are the consequences of having a thin file?
It makes it difficult to obtain credit or be approved for a loan.
What are credit utilization rates?
The percentage of available credit that you're using on your credit cards and other lines of credit.
How to build credit history?
Open a secured credit card, pay bills on time, keep debt low.
How to check your credit scores and reports?
Through trusted apps or websites.
When is it a good idea to borrow?
If you owe a substantial balance on one or more high interest rate credit cards.