Credit
What is collateral?
Property that is pledged if a borrower is unable to pay their debt
What is a FICO score?
a three-digit number that lenders use to assess your creditworthiness, via your credit rport
What affects your credit history more? Closing an old credit account or leaving it open?
Closing, this can lower the average age of your credit accounts and potentially increase your credit utilization ratio
Why is having no credit history just as limiting as having bad credit history?
What is the ideal credit utilization ratio? (Percentage)
below 30%, but 10% or lower is even better for excellent credit
What does a soft pull on your credit do?
Nothing, a soft pull does not affect your credit score. Used for various things such as pre-approvals, checking your own credit, and background checks.
What is revolving credit?
How long does a derogatory mark stay on your credit history?
It will negatively effect your credit for 7 years, but will stay on your credit history forever
What is the difference between secured and unsecured?
Secured loans and credit are backed by collateral (Car, house, cash, etc.) while unsecured are not. If you default on the loan or line of credit, the lender can seize your collateral.
What are the five factors of your FICO score?
Payment history - 35%
Amounts owed - 30%
Length of credit history - 15%
Credit mix - 10%
New credit - 10%