Credit Score
What is the highest credit score possible?
850
What is Credit?
This is borrowed money that needs to be repaid with interest.
What is Debt?
Debt is something that you have to repay, usually including interest.
Is debit card the same as a credit card?
No. A debit card takes money directly from your bank account, but a credit card makes you pay at the end of the month.
You have a $1,000 limit and just spent $900 on a laptop. If you pay it off in full next week, will it still affect your score?
It might, because if the credit bureau sees a 90% balance, it might lower your credit score.
Does your bank account balance affect your credit score?
No
How long does a late payment stay on your credit report?
7 years
What happens to your debt if you die?
Debt doesn't disappear when you die, but it will be repaid somehow, as in cash, property, investment, etc.
What happens when you miss a credit card payment?
You get a 'L' in your credit report, which means that you have a late payment.
You forgot to pay your credit card bill and it’s now 5 days past the due date. Will your credit score drop immediately?
No. Most banks don’t report late payments to credit bureaus until they are 30 days past due. You’ll likely pay a late fee, but your score stays safe if you pay within that 30-day window.
What is the range of a good credit score?
670-740 is considered 'Good'
What is the difference between 'C's and 'L's on your credit report?
C = Good; make credit score higher
L = Bad; Lowers credit score if there are a lot
How long does it take for debt to fall out of your credit report?
About 10 years
What are some different types of credit cards?
Secured credit card, Authorized user card, Credit builder loan.
You open your credit card statement and found a $100 charge that you didn't make. What would be your first step?
Call your card issuer to talk to them about the payment.
If you have no credit history at all, how long does it typically take to generate your first FICO score?
6 months
If you are an "authorized user" on someone else's credit card, can their good (or bad) payment habits affect your creditworthiness?
Yes
What is Debt-to-Income (DTI) Ratio?
It is your monthly debt payments divided by your monthly income.
What does it mean to be creditworthy when using a credit card?
You use your money on the right places, is willing and able to repay what you borrow, and how much money you use of credit card.
You’ve had a credit card for a year and always pay on time. Can you get a lower interest rate?
Often, yes because when you just call them back, and many issuers would so they can keep you as a customer.
Does your credit score affect the cost of things like apartment rent, car insurance, etc?
Yes
What qualities does a person need to maintain a high credit score?
Consistency, low usage, low late payments, patience, etc.
Is it better to pay off debt or save for emergencies?
It is good to balance it out, but it is good to start a small emergency fund, then start paying off your debt.
What is minimum payment in a credit card?
It is the smallest amount of money you need to pay each month to keep your credit report good.
You’re renting your first apartment and the landlord asks to run a credit check. Why?
They do it so they can check to make sure that you are a responsible person.