Credit Score
Name one component of credit score and how it affects the score.
Payment history; it affects credit score by 35%
What is the term that represents the amount of revolving credit you're using split between the total credit available to you?
What is Credit Utilization Rate
The consequences of not having a long credit history are...
Explain why these consequences occur
making it challenging to be approved for credit because you do not have much credibility or experience with utilizing and being responsible with credit
What is a component of credit score? How does it impact the score?
Credit Utilization; impacts your credit score by 30%
How does a person's credit score determine his/her ability to borrow and at what interest rate?
A person with a higher credit score will be more likely to be approved for more credit from lenders and lower interest rates because of their credit history. The opposite occurs for people with low credit scores.
Why is it important to build a credit score from a young age and how to do this?
This is important because credit influences many later life decisions, so starting young is helpful. Ways to start building credit score young are by getting a starter credit card, getting on your parents credit cards, and paying on time.
What is the component of credit score that shows how long you have been proving your ability to manage debt, and how does it impact your credit score?
Length of credit history; impacts it by 15%
Around four times a year. But be cautious because your credit score drops a small amount ever check.
What type of loan is a credit card?
Short term loan
Name one component of credit score and provide the percentage it affects the credit score
Credit mix; 10%
Go to Experian, Equifax, or TransUnion and sign up for free to check
When is it a good time to take out credit and borrow?
When you feel confident and have some experience in paying off credit you will understand the process and not gain any debt
What is another component of credit score and how much it impacts the score?
New credit; 10%
How can someone build and improve their credit score?
Ensure you pay bills on time, stay employed, keep an eye on you credit score, and try to not get behind on payments and gain debt
What will happen if the minimum balance is paid every month?
The interest will rise and may even cause the person to go into debt