Credit Score
What is credit score?
A three-digit number representing a consumer's creditworthiness.
This is the most important factor, accounting for the largest percentage of your score. What is it?
Payment History.
If you have a high credit score, are you more likely to get approved for a new credit card or loan?
Yes, a high score makes you a more attractive candidate to lenders, significantly increasing your chances of loan approval.
What simple habit helps avoid late fees and the biggest negative impact on your credit score?
Making all of your payments on time every month.
What first step can someone new to credit take, often by working with a parent or trusted adult?
Become an authorized user on an existing credit card account.
What is 300 to 850?
The typical range of FICO.
This factor measures how much of your available credit limit you are using. What is it?
Credit Utilization.
A good credit score can help you secure what lower financial cost when borrowing money?
A lower interest rate. This saves you a substantial amount of money over the life of a loan or mortgage.
What strategy involves only charging what you can realistically pay off each month?
Keeping your credit card balances low or paying them off in full monthly to avoid high-interest debt.
What specific type of credit card is designed for people with little or no credit history?
A secured credit card.
What is the payment history?
Accounting for approximately 35% of the score calculation.
This factor considers how long you have been using credit accounts. What is it?
Length of Credit History.
When looking for a place to live, how do landlords often use your credit score?
Your credit score.
What term describes the ratio of your current credit card balance to your total credit limit?
Credit utilization (or rate).
After using a secured card responsibly for several months to a year, what type of card should you consider applying for next?
A unsecured credit card.
What is amounts owed (or credit utilization)?
This is a factor often called utilization rate, accounts for roughly 30% of the score.
This factor looks at whether you have credit cards, installment loans, or a mix of both. What is it?
Credit Mix.
In some industries, how might a potential employer use your credit history during the hiring process?
Modified version of your credit report as part of a background check to evaluate your level of responsibility and reliability for employment purposes.
What practice helps ensure the information used to calculate your score is correct and allows you to catch identity theft early?
Monitoring your credit report regularly for errors or suspicious activity.
What type of alternative credit can help build a credit history without a traditional loan or credit card?
A credit-builder owner.
What is credit mix and types of credit?
The remaining top factors include credit history length, new credit, and this final category.
This final factor involves applying for new credit. What is it?
New Credit.
What major financial decision in your life is heavily dependent on having a strong credit history?
Getting approved for a mortgage to buy a home.
Instead of just meeting the minimum payment, what strategy saves you the most money in interest charges over time?
Paying more than the minimum due, or paying the balance in full as often as possible.
Once you have established a few credit accounts, what long-term strategy is not the best timeline of building a strong credit history?
Consistently using your credit responsibly over time.