Credit Basics
What is a credit score?
A number that represents a person's creditworthiness
What is the highest credit score you can typically have?
850
What is a credit limit?
The most money you're able to borrow on a credit card.
How can you start building credit if you have none?
Get a secured credit card or become an authorized user.
How long can a late payment stay on your credit card?
7 years
What is a credit report?
A record of how you have used credit in the past
What is the lowest credit score you can typically have?
What happens if you miss a credit card payment?
Late fee and credit score gets hurt
What's a way to build credit?
Pay bills on time (more than just this one answer)
What is bankruptcy?
A legal process when you're unable to pay your debts and it hurts your credit score really bad.
What are two things that a credit report shows?
Payment history
How much you owe
Creit inquires
Amount of credit accounts you have opened or closed
On time and delinquent payments
accounts that are in collections
the number of times you've applies for credit
What's a fair credit score rannge?
580-669
What's a credit card grace period
Time before interest starts if you pay the full balance on time.
How often should you check your credit report?
At least once a year, but the more frequently the better.
7-10 years
What's the difference between a credit report and a creit score?
A credit report shows your history while the score is a number based on that history
What's the average credit score for Americans
around 715
What happens if you go over your credit limit?
You'll get a fee and hurt your credit score
What's the benefit of having a long credit history?
It can help increase your credit score
What happens if you only make the minimum payment on your credit card?
You'll pay more in interest it also takes longer to pay off your balance.
What is interest?
The extra money you pay back on top of what you have already borrowed
What is the recommended credit utilization rate to keep a healthy score?
30% or less
What's the name of the bill you get for a credit card monthly
A statement
TRUE OR FALSE: Applying for a lot of credit cards at once is a good thing.
FALSE
What's the danger of having a high credit utilization rate?
It can lower your score and make a lender think you're risky