Credit Score
Which of the following is NOT likely to check your credit score? Auto Loan Lenders, Landlords, Federal student loan office
Federal student loan office
Why is it more difficult for young people to borrow (i.e., get a loan)?
because they have less payment history for a lender to rely upon
What is the longest something can stay on your credit report? What is it?
What is the snow ball method?
Paying down your lowest debt first, then your next biggest, etc.
Sam is carrying a balance on his credit card of $500. The credit limit on the card is $1,500. What is his utilization rate?
33%
How can your credit score impact your financial situation?
Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be.
Debbie says, “Stop making the credit card payment for a few months until you’re caught up on your auto loan.” - Is this good advice or bad? Why?
Bad. You have to make min payments on your cards/loans or it will effect your credit score.
Which of the following would NOT appear on a credit report? Job Salary, Payment History, Loan Activity
Job Salary
What is the high rate method?
Paying the highest interest rate cards first.
What is the relationship between a credit score and credit report?
The information in your credit report is used to calculate your credit score
Which of the following could have a NEGATIVE impact on your credit score? Paying your bills on-time, Paying down balances on your credit card accounts or applying for multiple credit cards in a short period of time (e.g., a week)
Applying for multiple credit cards in a short period of time (e.g., a week)
According to the Equal Credit Opportunity Act, which of the following factors CAN a lender legally use to charge you a higher interest rate.
Your credit score
Who tracks all of your credit information?
Companies named Equifax, Experian and TransUnion
If you had $75,000 worth of debt which method would you (snowball or avalanche) use and why?
Either with a good reason
Provide three reasons for why it is important to start establishing a credit history as early as possible.
You're more likely to be approved for credit products, like a credit card or loan.
Lower interest rates. The higher your credit score, the lower interest rates you'll qualify for.
Better terms: good credit can help you qualify for the best terms on basically every kind of credit product.
What are the two most important factors in calculating your credit score?
Payment history and amounts owed
Melvin is 19 years old and wants to begin establishing a credit history. Which actions should he take to meet that goal?
Ask someone to cosign a card/loan with you
I forget to pay my credit card bill one month. How long will that payment information show up on my credit report?
7 years
Your teacher tells you about the importance of checking your credit report. Which government-run website allows you to download your credit report for free on an annual basis?
Dora has a home currently worth $150,000, for which she still owes $75,000 on her mortgage. She has $8,000 in student loan debt and $10,000 in credit card debt. She likes to keep a large emergency fund, so she has $15,000 in a savings account. Her annual salary this year will be $64,000. What is Dora’s net worth?
$72,000
What is the single best way to improve your score?
Make on-time payments
Complete the sentence "It's best to begin establishing credit when you're young because ________" ?
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card
What are benefits of having good credit? (at least 3)
Some answers may be: better rates, qualifying for more loans/cards, able to get better credit card benefits, bragging rights, fewer security deposits,
You find an error on your credit report: your credit card account indicates that you are 60 days late on your payment but you have bank records indicating that you have always made on-time payments. What should you do FIRST?
Contact your credit card company
Heather receives a phone call, in which an automated voice states that her credit card has been used fraudulently and that she must enter her 16-digit credit card number, using the keypad of her phone, to clear up the error. What should Heather do next?
Hang Up and call the number on the back of your credit card