Managing Credit

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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 general conclusion can you draw from this bar graph? Options: Credit scores tend to drop as you grow older because you are more likely to miss a payment at some point, It is more difficult for young people to borrow (i.e., get a loan) because they have less payment history for a lender to rely upon, When young people borrow, they are likely to have lower interest rates because their credit scores are lower, It is easier for young people to get loans at lower interest rates because they are likely to have never been late with a payment

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It is more difficult for young people to borrow (i.e., get a loan) because they have less payment history for a lender to rely upon

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What is Sam's credit utilization rate if he has a balance of $500 and a credit limit of $1,500?

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33%

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Which of the following would NOT appear on a credit report? Salary of your current job, Payment history of your car loan, Credit card payment history, Student loan activity

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Salary of your current job

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Your teacher tells you about the importance of checking your credit report. Which government-run website allows you to download your credit report for free on an annual basis?

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annualcreditreport.com

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Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score? Options: Cancel his credit cards, Get a car loan, Check his credit score.

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Make on-time payments

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Which of the following will help you begin developing a credit history before you graduate from college: Always say "credit" when asked "credit or debit?" at a store, Make small payments on your student loans while in college, even though they are not required to be paid back until you leave, Any time you borrow money from your parents, friends, or family, be sure to pay it back promptly, Be sure to keep a bit of your paycheck in a savings account instead of a checking account?

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Make small payments on your student loans while in college, even though they are not required to be paid back until you leave.

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Each of the following is likely to check your credit score EXCEPT? Credit card companies, Auto loan lenders, Landlords, Federal student loan office

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Federal student loan office

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Frank and Jasmere are both shopping for a new car. They are looking for a $20,000 loan to pay for the new car that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE? Over the five year period, Jasmere and Frank will pay the same amount for the car loan; Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment; Jasmere's monthly payment on the loan will be about $100 more than Frank's payment; Lenders are not allowed to charge people different interest rates based on their credit scores.

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Jasmere's monthly payment on the loan will be about $100 more than Frank's payment.

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How can your credit score impact your financial situation?

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