Credit Basics
This is the term for money you borrow and agree to pay back later.
What is credit?
This is a low credit score
What is 580 or below?
Improve your credit score by
What is
Pay bills on time
Reduce the amount of debt owed
Correct errors
Will a lower credit rating stop you from buying a home or getting a mortgage?
Not if you work with the right company. For example, Newrez offers a loan product called SmartTrac that is aimed at borrowers with credit scores of 620 and up, and does not exclude borrowers who have had financial issues such as bankruptcies, short sales or deeds in lieu.
This is the first step you should take when trying to fix your credit.
What is checking your credit reports for errors?
Is your name is misspelled?
Is your address outdated?
Was a payment that was made on time mistakenly reported as late?
Is the current balance correct?
Is the credit limit correct?
This three-digit number helps lenders decide if you’re a good credit risk.
What is a credit score?
Making these on time is the single most important thing you can do to improve your credit score.
What are on-time payments?
The two largest percentage contributors to our FICO score are.
Payment History and Length of Credit
Lenders consider these components during the loan process
What is
Credit Report
Amount in Savings
Total Assets
Current Income
This is the term for incorrect information on your credit report.
What is a credit reporting error?
The credit bureau has 30 days to investigate the dispute.
If a credit bureau doesn't respond in time the item must be removed from your report.
These are the three major credit bureaus in the U.S.
What are Equifax, Experian, and TransUnion?
This is the most important factor in calculating your credit score.
What is Payment History?
Keeping this below 30% of your credit limit can help raise your score.
What is your credit utilization ratio?
When you close a credit card, you reduce your total available credit. This can negatively impact your credit utilization ratio, which is a major factor in your credit score.
What is Credit Utilization Ratio?
It’s the percentage of your total available credit that you're currently using.
This is what you become when someone adds you to their credit card account to help you build credit.
What is an authorized user?
Actions you can take: Ask a parent or other loved one to add you as an authorized user on their account. Before you do, however, make sure that the account has a positive payment history and a relatively low credit utilization rate.
This is the most important factor in your credit score and should always be prioritized.
What is paying your bills on time?
This is what happens to your credit score when you apply for several credit cards in a short period.
What is a temporary drop due to multiple hard inquiries?
The 5 factors most widely used to determine credit score are.
What is
Payment history
Amounts Owed
Length of Credit
Credit Max
New Credit
This debt-reduction strategy involves making payments more than once a month to reduce your balance before your statement closing date, potentially boosting your credit score.
What is making early and frequent debt payments?
Many people believe checking your own credit score will hurt it, but this is actually false.
What is a soft inquiry that doesn’t affect your credit score?
This is a type of credit card that requires a deposit and helps build or rebuild credit.
What is a secured credit card?
Because of the security deposit, secured cards are generally easier to get approved for, even with a low credit score or limited credit history
This is the ideal percentage of your credit limit to use to keep your credit utilization low.
What is 30% or less?
Credit utilization is the percentage of your available revolving credit (like credit cards) that you're currently using.
TIP: Ask for credit limit increases (without increasing spending)
Applying for too many credit cards at once can hurt your score due to this.
What is a hard inquiry?
Instead of closing old credit cards, you should do this to help your credit history.
What is keep them open and active?
Why Keeping Cards Open Helps
Many think that once a collection account is paid, it no longer affects your score.
What is the myth that paying a collection account removes its negative impact immediately?
This financial makeover includes disputing errors, paying down balances, and making on-time payments to boost your credit score over time.
What is repairing your credit?