Unit 4 - Managing Credit

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What is a credit score?

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A credit score is a numerical representation of a person's creditworthiness, based on their credit history and financial behavior.

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How does a credit score affect loan approval?

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A credit score can determine whether you are approved for a loan and what the interest rate on that loan will be.

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What are the two most important factors in calculating your credit score?

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Payment history and amounts owed.

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What companies track your credit information?

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Equifax, Experian, and TransUnion.

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What information does NOT appear on a credit report?

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Salary of your current job.

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What is payment history?

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Payment history is a record of your payments on credit accounts, including whether payments were made on time.

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What does 'amounts owed' refer to in credit scoring?

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'Amounts owed' refers to the total amount of debt you currently have across all credit accounts.

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What is the impact of a low credit score?

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Consumers with low credit scores typically receive higher interest rates on loans and may have difficulty getting approved for credit.

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What is a credit report?

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A credit report is a detailed account of an individual's credit history, including credit accounts, payment history, and outstanding debts.

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What is the role of lenders in credit reporting?

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Lenders report your credit activity to credit bureaus, which helps in the calculation of your credit score.