Credit Basics
What is credit?
True or False: your payment history is the most important part of your credit score.
True
What is a credit card?
An example of a line of credit.
Other examples include a car loan, student loan, personal loan.
What percentage of your score does credit history make up?
15%
What is worse - having no credit or misusing the credit you have
Having no credit
What is a credit score?
A number that tells lenders (people who lend money) how financially responsible you are and how good you are at paying off debts.
What percentage of your score does payment history make up?
35%
What’s the recommended spending limit on a credit card?
Less than 30% of your limit
True or False: you should close your oldest credit card every year.
False.
Keep it open!
Does checking your own credit report hurt your score?
No
What makes up your credit score?
Payment history, amounts owed, length of credit history, new credit, and credit mix.
True or False: your payment due date is different than your statement date.
True
How can you start building your credit before you have your own credit card?
Ask a family member with good credit to add you as an "authorized user" on their credit card.
What is an example of a new line of credit?
There are many!
Getting a new credit car, getting a car loan
What can happen if you apply for multiple credit cards in a short time?
Your score may drop due to multiple hard inquiries.
What is a FICO score?
What most lenders use to help determine your credit score.
True or False: your credit mix does not impact your payment history.
False. Your credit mix is the different types of credit you have. The longer you have had credit, the more payment history you have.
What should you pay off, in full, every month?
Your credit card balance
What can happen when you open a new line of credit?
Your score is impacted.
What credit score do you need to have to approve for most things?
740
What are three places you can find your credit score?
Credit reporting agencies (like Equifax or TransUnion), Credit Karma, Online banking portal
What three factors make up a strong credit score?
On-time payments, low credit usage, and long credit history.
What could happen if you max out your credit card?
Your credit score could decrease (drop) because of high credit card usage.
When should you start building credit and your credit score?
As soon as you can!
What should you consider before opening a new credit account?
Whether you really need it, and how it affects your score and financial goals.