Understanding Credit Assignment

Greg used his credit card to buy exercise equipment. The cost was $826.38. If Greg pays $50 a month for 20 months, the total interest will be $139.33. Greg decided instead to pay only the minimum amount each month. That will take him 124 months and the total interest will be $1,038.08. How much would Greg have saved if he had paid $50 a month instead of the minimum amount? Greg would have saved $

898.75

Heidi and her family took a vacation. Heidi placed the hotel room charge of $689 on her credit card. She paid the minimum of $20 a month for 49 months. At an interest rate of 18%, she paid $287.90 in interest. How much did Heidi spend on the hotel room?

976.90

Mark wants to buy a new computer and apply for a new credit card to pay for it. He checked his credit report and credit score. His credit score is 620. It is fair, but Mark wants a lower interest rate and a higher limit. So he wants to improve his score.

A

Martin used his credit card to buy a new bike. Which statement is true?

A

Explain what a credit report is and list five kinds of information found on a credit report.

A credit report is a detailed written document about a person's credit history. The report contains personal information, anything found in public records, information from collection agencies, information about credit cards or loans, and a list of those who have requested a copy of the report.

Which are considered good credit practices? Check all that apply.

B C D

Which would decrease your credit score? Check all that apply.

B C D

Ahmed wants to buy a new car. His credit score is 750. Based only on his credit score, do you think he will qualify for a car loan? Explain why or why not. Be sure to describe what a credit score is and how it is used by lenders.

Sample response: Yes, Ahmed has a very good credit score. A credit score is a numerical rating that shows how good one's credit is. It ranges from 300 to 850. Lenders will use his credit score to determine how likely it is that he will pay back the loan. With a score of 750, they will be confident that he will pay the money back.

Decide how each action would affect your credit score. You make more than minimum payments before the due dates. You missed a credit card payment in November and paid a late fee. You opened three new credit card accounts in a month. Your employer gave you a raise, so your income increased. The balance on your credit card is close to the credit limit.

increase decrease decrease no effect decrease