Score Detective
A lender uses this three-digit number to evaluate your creditworthiness.
What is a credit score?
This document contains information about your credit activity and current credit situation.
What is a credit report?
You want to make sure you never forget a payment. Name one strategy from the presentation.
Set up automatic payments or payment reminders
This is the first thing you should do when you want to improve your credit.
Get your credit reports
A company wants an upfront fee before helping you repair your credit. Red flag or not?
RED FLAG
Your credit card company shows you a 720 score, but your auto lender shows you a 705. Is one necessarily wrong? Explain.
No. You can have different credit scores because lenders may use different scoring models, different credit reporting sources, and scores may be calculated at different times.
Name the three major credit reporting companies discussed in the presentation.
Equifax, Experian and TransUnion.
You have three credit cards but only use one. You decide to close the other two. Why could that potentially hurt your score?
Closing accounts can change your available credit and potentially cause more of your remaining credit limit to be used. The presentation specifically warns that closing some cards and putting most of the balance on another card can hurt your score
Name two things someone trying to rebuild their credit should do consistently.
A company says, “We can remove ALL negative information from your credit report.” What should immediately make you suspicious?
The promise to remove all negative information. The presentation identifies this as a credit-repair scam red flag.
Your credit score changes even though you didn't apply for anything. Give one reason this could happen.
he information or timing used to calculate the score may have changed. For example, a creditor may have updated information with a credit reporting company, or the score may have been calculated at a different time.
You're reviewing your report and find an account you don't recognize. What should you do?
Investigate/dispute the information if it is inaccurate. The presentation recommends reviewing your reports for errors and disputing incorrect information
You need a loan, but you've also recently applied for two credit cards. Why might applying for even more credit right now be a bad idea?
Recent credit activity matters. Applying for a lot of credit in a short period can indicate that your financial situation has changed.
Someone doesn't qualify for a regular credit card. What type of card does the presentation suggest they consider?
A secured credit card.
A company tells you not to contact the credit bureaus yourself because only they can fix your credit. Is that legitimate?
No. You have the right to dispute errors yourself for free
Two people have the exact same credit score today, but a lender gives them different scores when they apply for different products. How can that happen?
Different lenders/products can use different scoring models. A credit-card score, auto-loan score and home-loan score may not be the same.
Your credit report contains information you believe is incorrect. Who does the presentation say you should generally send a dispute to?
The credit reporting company AND the company that furnished the information.
You have a $10,000 total credit limit and $8,000 in balances. You haven't missed a payment. What is still potentially hurting your credit?
Your high credit utilization. You're using 80% of your available credit, and the presentation recommends keeping credit card balances low relative to your limits.
Someone has several late payments, high balances and multiple recent applications. Which one of those areas should they NOT expect to fix overnight?
All of them! Credit rebuilding takes time. The presentation specifically ends the rebuilding section with “Keep it up!”, and the six-step plan includes “Give it time.”
A company tells you, “You have to pay us because disputing an error yourself will hurt your credit.” What is wrong with this statement?
It's false. You are entitled to dispute errors yourself, for free. The presentation specifically identifies telling consumers not to contact the bureaus as a red flag
A person checks their score in January and sees one number. In February, a lender checks their credit and sees another. Name three factors that could explain the difference.
You find an error on your report. According to the presentation, what should you include when submitting your dispute?
The presentation also says credit reporting bureaus are obligated to respond within 30 days.
Someone says, “My score dropped, so I should immediately open three new credit cards to build more credit.” Based on the presentation, what is the problem with this strategy?
Opening multiple accounts quickly can hurt rather than help. The presentation recommends only applying for credit you need and warns that applying for a lot of credit in a short period can negatively affect your credit.
Put these in the correct order: lower balances, get reports, make payments on time, look for errors, avoid unnecessary credit applications, give it time.
A company promises to “scrub” accurate negative information, charges an upfront fee, and tells you not to contact the bureaus. What are the red flags?