Credit Test
What are four benefits of having a good credit score?
it lowers your interest rate, it speeds up credit approvals, reduces deposits required by utilities, and you can get approved for insurance
Fair Credit Reporting Act
law that grants consumers to the right to know who requests to view their credit report over the past year
Credit
money that a business or lender will allow you to borrow but you will pay back later
Which two areas count for the least amount of points when measuring your credit score?
new credit and credit types
How many points can be earned for your credit score by NOT opening or doing something?
not opening or applying for credit accounts for a long period of time
Payment History
one receives points for paying bills on time
What are three ways you can boost your credit score?
paying your bills on time, keeping a low balance on your credit cards, and applying for and opening new credits only when you need them
When calculating a credit score, which area is consisted the most important and counts for the most points?
payment history
What are the five areas that are measured and determine a person's credit score?
payment history, how much you owe, length in credit history, new credit, and types of credit.
Good and Bad Credit Decisions
points are earned for good credit decisions and points are taken away for bad credit choices
Co-signing
signing with someone where if they fail to pay something, it effects your credit score-never do it
Which two categories count for the most points when measuring your credit score?
the amount owned and your payment history
What is a credit bureau?
the organizations that maintain records on everyone's credit activity and habits
Credit Score
the total number of points that measures your risk of paying lenders back
What is everyone allowed to view?
their own credit report
Why should you check your credit report?
to make sure there are no errors of fraudulent use
If your credit score is below 600, what type of credit risk are you considered by lenders?
you are considered at high risk
If your credit score is above 700, what type of credit risk are you considered?
you are considered at low risk
To raise your credit score by 50 points, what actions could you take?
you would need to pay down further and have no new accounts opened
To raise your credit score by 80 points, what actions could you take?
you would need to pay off your accounts
What actions would you need to take to raise your credit score by 260 points?
you would need to pay off your accounts, build history of paying on time, pay down credit balance, pay down further and have no new accounts opened, pay all overdue payments and keep loans current, and have six months of on-time payments
If you have a credit score below 500, what would your credit rating be?
your credit rating would be considered bad credit
In order to receive a credit rating of excellent, what must your score be?
your score must be 781-850 points
What are the three credit bureaus?
Equifax, Experian, and TransUnion
What do credit bureaus issue to lenders?
issue credit reports
Credit Risk
The risk that customers will fail to make promised payments as they come due
In the "how much you owe" category, what will a person earn points for?
a person will earn points based on the less you owe
In the "length of your credit history" category, how does a person earn points?
a person will earn points based on your history of using credit responsibly
How do you tell what a person's credit risk is?
by looking at their credit score and their credit rating
What is the range of points for credit scores?
can range anywhere from as low as 300 to as high as 850
What does each credit bureaus collect?
collects information that they think is important for identifying a person's credit and worthiness and provides a score
Creating a New Account
creating a new credit account hurts your score and points are subtracted
Secured Credit Card
credit card if you absolutely need a credit card-securing your funds with funds
Unsecured Credit Card
credit card that doesn't require you to deposit money into a bank account in order for you to get a credit card
Why is it important to have a good credit score?
it allows you borrow money a larger amount of money, borrow money easier, borrow money cheaper, employers could check your credit score reputation, and car insurance companies use it