Building and Managing Credit
What is one strategy to build your credit score early?*
What is opening an account on a parent's credit card, opening a student credit card, or taking out a small loan.
This strategy involves being added to someone else's credit card account, potentially benefiting from their positive credit history.
What is becoming an authorized user?
What is the risk associated with not regularly monitoring your credit report?
What is the risk of identity theft and fraud?
This numerical representation accesses a person's credit worth based on their credit history.
What is a credit score?
This component of a credit score is influenced by the average age of your accounts and can impact your overall score significantly.
What does a higher credit score typically result in?*
What is a higher chance of approval for loans and lower interest rates?
How often should a person check their credit score and credit report? Methods?
What is at least once a year?
They can do so for free through annualcreditreport.com or by using credit monitoring services.
Name one of the five components that make up a credit score.*
What are payment history, credit utilization, length of credit history, types of credit in use, and new credit inquiries?
What is a way an individual can build or improve their credit score?*
What are paying bills on time, keeping credit card balances low, diversifying types of credit, avoiding opening too many new accounts, and regularly checking credit reports for errors?
What is a main difference between secured and unsecured credit?*
What is that secured credit requires collateral, while unsecured credit does not?
What is the process called when individuals work to improve their credit score by addressing negative items on their credit report?
What is credit repair?
This component of a credit score measures the percentage of available credit a person is using.
What is credit utilization rate?
If a person has a thin credit file, what is a challenge might they face?*
What are difficulties in getting approved for loans, higher interest rates, and limited financial opportunities?
This term refers to the maximum amount of credit a lender is willing to extend to a borrower.
What is credit limit?
This component of a credit score reflects whether a person has made their credit payments on time.
What is payment history?
What is the typical range for credit scores, and what is considered an excellent score?*
What is the range from 300 to 850, with a score above 800 typically considered excellent?
This financial ratio compares a person's monthly debt payments to their monthly gross income and is used by lenders to assess their ability to manage payments.
What is debt-to-income ratio (DTI)?
When might it be a good idea to borrow money instead of paying in cash?*
What is when making large purchases like a home or car, or to take advantage of favorable interest rates?
What are the two types of credit inquiries?
What are hard inquiries and soft inquiries?
This component of a credit score considers the different types of credit a person has, such as credit cards, loans, and mortgages.
What is credit mix?