Credit Basics
What type of credit generally has a very high and variable interest rate?
Credit Cards
Give an example of a good debt and a bad debt.
Good: Mortgage
Bad: Car Loan
What is a credit bureau, and how many are there?
Aggregates your borrowing activity and payment history.
3
Getting your first loan can be challenging, and often the use of a ______________ is needed.
Co-Signer
What is an auto loan seen as a bad debt?
Borrowing money ie. paying interest on a depreciating asset ie it goes down in value.
What are the three credit bureaus?
Hint: Ex....
Eq...
Trllll
Experian
Equifax
Transunion
What is a common interest rate for credit card purchases?
>19%
A longer term on a loan will reduce your monthly payment. What else will a longer term effect?
Total of Payments
The longer the loan the more you will pay in total repayment.
Do all lenders report to all three credit bureaus?
Why not?
No. They don't have to.
What are the 3 main inputs in the payment function?
Principle, Interest Rate, Term.
What is a FICO score?
FICO stands for the Fair Issacc Company who created the score.
It is the "benchmark" credit score used for most lending decisions.
What has been the traditional recommended down payment percentage on a home purchase?
20%
What is the range of possible credit scores?
300-900
Estimate your savings in total payments for a $400,000 mortgage at 6% for 30 years to 15 years.
$255,776
What do you think are some of the inputs into a credit score formula?
Length of Credit History
Payment History
Amount of Debt
Proportion of debt that is credit cards
Collections
Bankruptcy