Credit Basics
What is credit?
This is borrowed money that you promise to pay back later.
What is 300 to 850?
Credit scores typically range from this low number to this high number.
What is a credit limit?
This is the maximum amount you can borrow on a credit card.
What is the principal?
This is the amount of money you originally borrow.
What is good credit?
Paying your bills on time helps you build this.
What is a credit report?
This document shows your credit history and borrowing activity.
What is payment history?
This factor makes up the largest portion of your credit score.
What is APR (Annual Percentage Rate)?
This is the interest rate charged on unpaid balances.
What is a mortgage?
This type of loan is commonly used to buy a home.
What is 30%?
Experts recommend keeping your credit utilization below this percentage.
What is a credit score?
This three-digit number represents your creditworthiness.
What is credit utilization?
This ratio compares how much credit you’re using to how much you have available.
What is the minimum payment?
Paying only this each month will keep your account in good standing but increase interest paid.
What is simple interest?
This type of interest is calculated only on the principal
What is once per year?
This is how often you can check your own credit report for free from each bureau.
What is a credit bureau?
This agency collects and maintains your credit information.
What is 670?
A score above this number is generally considered “good” credit.
What is going over the limit (over-limit charge)?
This happens when you spend more than your credit limit.
What is compound interest?
This type of interest is calculated on the principal plus accumulated interest.
What is length of credit history?
Closing old credit accounts can hurt this factor of your credit score.
What is a hard inquiry?
This term describes when a lender checks your credit for a loan or credit card application and it can slightly lower your score.
What is FICO?
This scoring model is most commonly used by lenders in the U.S.
What is a secured credit card?
This type of credit card requires a deposit as collateral.
What is paying more interest over time?
A longer loan term usually results in this overall effect on total interest paid.
What is the debt snowball method?
This strategy involves paying off the smallest debt first to build momentum.