Credit Test

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

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