Scenarios
Laurence and Cindy both have had good jobs for several years and want to get a credit card. They expect to pay off all charges in full each month to keep from having to pay finance charges. They are trying to decide if the card is right for them. Should they get the Card?
Yes, they would be wise to get a card with no annual fee, and a longer grace period, to help them pay the card off each month.
___________ refers to the recent credit accounts or loans that a person has opened.
New credit
According to FICO, what makes up 35% of your credit score? a) length of history b) new credit c) how much you owe d) your history e) credit mix
D
What is MMA?
Money Market Account
Max often finds that he cannot make it to his next payday on the money he makes, so he wants a card to get cash advances when he needs them. Should he get the Card?
No, if he can’t manage his current salary, he probably would not be able to make the monthly payments.
___________ refers to the total money that a person or business owes to others, usually through loans, credit cards, or other forms of borrowing.
Amount of Debt
According to FICO, what makes up 15% of your credit score? a) length of history b) new credit c) how much you owe d) your history e) credit mix
A
How long does it take to get a good credit score?
Roughly 5-10 years
Nelson is a recent college graduate but has not started a job in his degree field. He is currently working in retail and has numerous expenses for material items. He wants a credit card. Should he get the Card?
No, because Nelson might be tempted to use his credit card as income, which could lead to huge debt.
___________ refers to the different types of credit accounts you have, such as credit cards, mortgages, car loans, or student loans
Credit Mix
According to FICO, what makes up 10% of your credit score? a) length of history b) new credit c) how much you owe d) your history e) credit mix (2 possible answers)
B & E
What is the 50-30-20 rule?
50% of your check goes to needs, 30% goes into wants, 20% goes into savings
Drew has had a good job for a couple of years and is considering getting a credit card. He has been thinking about traveling and feels that it might be a good idea to have a card that offers frequent flyer miles. Should he get the Card?
Yes, he can gain airline miles, and other rewards are sometimes offered as incentives to get people to use the cards. If he travels a lot, this card might be good for him but be cautious of large annual fees.
___________ is a record of all the payments you've made over time, like paying bills or loans. It shows if you paid on time or missed any payments.
Payment History
According to FICO, what makes up 30% of your credit score? a) length of history b) new credit c) how much you owe d) your history e) credit mix
C
When were credit cards introduced? (guess by decade)
1950
The Lees are a young family of four, with both parents working. Eddy is thinking about buying a new car in a year or two, and both he and Tiana will want to buy a house someday. They are thinking about getting a credit card now even though they presently don’t have a lot of need for credit. Should they get the Card?
Yes, this family might benefit from a credit card, using it for small purchases, buying things by telephone or Internet, and/or using it in an emergency. This way, they can build up their credit history so that they will be able to finance a car or a house in the future
___________ refers to how long your credit accounts have been open.
Length of History
what are some bonuses you get with credit card companies?
Cashback, Miles, Travel Awards, Statement (etc.)