Credit Report
What is the difference between a hard inquiry and a soft inquiry?
Hard inquiry = affects credit score (credit application).
Soft inquiry = does not affect score (checking your own credit, pre-approval).
What does APR stand for?
Annual Percentage Rate.
What is a secured credit card?
A card that requires a refundable deposit and is typically used to build or rebuild credit.
What % of a FICO score is made up of Credit Utilization (Amounts Owed)
30%
If a student finds an error on their credit report, what is the appropriate next step?
Dispute the error with the credit bureau
Provide documentation
Monitor report for correction
If you pay your statement balance in full every month, do you pay interest?
No
What is the main difference between a student credit card and a regular unsecured credit card?
Student cards are designed for limited or no credit history and may have lower limits and simpler approval requirements.
What is the largest factor in a FICO Score
Payment History 35%
How can being an authorized user impact someone’s credit report?
Payment history may appear on report
Can help build credit if primary user is responsible
Can hurt if primary user misses payments
Does not equal full primary account ownership
What is a grace period, and why is it important?
Time between statement closing date and due date
No interest charged if balance is paid in full
Only applies when you don’t carry a balance
What is a balance transfer card, and when is it most useful?
- Offers 0% intro APR for transferred debt
- Used to pay down high-interest balances
- Best when no new spending is added
A student has a $1000 credit limit; what is the ideal credit utilization rate?
$0-$300; 0-30%
What are the three major credit bureaus?
Equifax, Experian, TransUnion.
Why does carrying a balance at 24% APR become especially dangerous when only making minimum payments?
- Most payment goes toward interest
- Principal reduces slowly
- Debt lasts much longer
- Total cost increases significantly
How long does a credit card Inquiry last on your credit
12 months
A student has:
- 100% on-time payments
- 75% utilization
- 3 recent hard inquiries
- 1-year average credit history
Explain why their score may still be low, and rank the factors most responsible from greatest to least impact.
High utilization (major negative – 30% category)
Short credit history (15%)
Recent inquiries (10%)
Payment history is strong (35%) but not enough to offset others
What are the stats for how many Americans have errors on their reports
1 in 5 Americans
What are the 5 types of APR
1. Balance Transfer APR
2. Intro APR
3. Purchase APR
4. Penalty APR
5. Cash Advance APR
What two types of cards are largely accpeted internationally
Mastercard and Visa
What does FICO stand for?
Fair Isaac Corporation