Credit History
Define a credit score
A credit score is a number that represents your creditworthiness, or how likely you are to repay borrowed money.
What is considered a good credit score range?
670-739
(scores within 10 above, 10 below will be accepted)
True or False:
Checking your own credit score lowers it
False. You can check your own score and it will not be affected.
What is the most widely used credit score model?
FICO
What is an authorized user?
If a parent or guardian adds you to their credit card account, you can benefit from their credit.
How was credit determined before FICO?
Lenders based credit decisions on personal relationships, recommendations, or even personal judgment.
How old do you have to be to start building credit with a card?
18 with a cosigner, or 21 without a cosigner (in most cases)
True or False:
Closing old accounts can hurt your score
True
Pay Bills on Time: Your payment history makes up ____% of your score.
35%
How does your credit help your interest rate?
Higher credit = lower interest rates
What does FICO stand for?
Fair, Isaac & Co.
What happens if you miss a credit card payment?
It can negatively affect your score, lead to late fees and increase your interest rate.
True or False:
Variations in credit scores (between 40-60 points) are normal.
False. Variations should be 20 points or less - any more could indicate a larger issue.
Keep Credit Card Balances Low: The amount you owe is ____% of your score.
30%
Why does your credit matter to landlords and banks?
Because it is a tool for them to determine how financially responsible you are. Credit scores are based on debt to income ratio - not income alone.
What is FICO?
The first credit scoring model.
What percentage of your credit score is based on your payment history?
35%
True or False:
The average credit score in the USA is 724
False - it is 714
Don't Close Old Accounts: Length of credit history is ___% of your score.
15%
How does becoming an authorized user on someone else’s card help your credit?
It can add the primary account holder’s positive credit history to your report, which will boost your score if they have good credit.
What is the range for a poor credit score?
300-580 (answers 20 above or 20 below will be accepted)
What is the average credit score for people aged 18-29?
659 (an answer 10 above or 10 below will also be accepted)
True or False: The percentage of Americans with "good" or higher credit is 67%.
True.
Limit New Credit Applications: Each inquiry can slightly lower your score, and new credit makes up ___% of your score.
10%
Which can build your credit:
A. Paying utility or rent payments through a reporting service
B. Utilizing retail services like Afterpay or Klarna to track on-time payments
C. Using someone else's social security number without them knowing and claiming it as yours
C. Using someone else's social security number without them knowing and claiming it as yours
kidding...it's A.