Credit Score Flashcard

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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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Why do lenders check credit history when applying for a loan?

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Lenders check credit history to assess the risk of lending money to an individual, as it reflects their ability to repay debts.

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What does FICO stand for?

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FICO stands for Fair Isaac Corporation, which developed the most widely used credit scoring model.

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How can late bill payments affect your credit score?

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Late bill payments can negatively impact your credit score by indicating to lenders that you may be unreliable in repaying debts.

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Can landlords report unpaid rent to credit agencies?

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Yes, landlords can report unpaid rent to credit reporting agencies, which can affect a tenant's credit score.

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What is the impact of a low credit score on borrowing?

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A low credit score can lead to higher interest rates, loan denials, or less favorable loan terms.

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What factors influence a credit score?

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Factors include payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries.

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What is credit utilization?

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Credit utilization is the ratio of current credit card balances to credit limits, indicating how much of available credit is being used.

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How often should you check your credit report?

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You should check your credit report at least once a year to ensure accuracy and to monitor for any fraudulent activity.

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What is a credit reporting agency?

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A credit reporting agency is a company that collects and maintains consumer credit information and sells it to lenders.