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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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 new credit inquiries.

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What is the purpose of a credit score?

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The purpose of a credit score is to help lenders assess the risk of lending money to an individual.

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How can becoming an authorized user on a credit card help build credit?

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As an authorized user, you benefit from the primary cardholder's positive credit history, which can improve your credit score.

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What is a secured credit card?

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A secured credit card is a type of credit card that requires a cash deposit as collateral, which serves as your credit limit.

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Why is it important to make payments on time?

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Making payments on time is crucial because it positively impacts your credit score and demonstrates reliability to lenders.

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What is credit utilization?

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Credit utilization is the ratio of your current credit card balances to your credit limits, and it affects your credit score.

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What are the risks of carrying a high balance on credit cards?

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Carrying a high balance can negatively impact your credit score and increase your debt-to-income ratio.

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What is the impact of reporting rent payments on credit?

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Reporting rent payments can help build your credit score by showing a history of on-time payments.

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What should you consider before applying for a store credit card?

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Consider that store credit cards often have higher interest rates compared to regular credit cards.