Unit 3 - Managing Debt Flashcardziz Study Guide

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

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Payment history and total debt

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Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies, EXCEPT...
Reducing spending by canceling some of her streaming subscriptions, Taking extra shifts at work to increase her income, Making more than the minimum required payment on her debt, Applying for another credit card to use in case she runs out of cash paying off her debt

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Applying for another credit card to use in case she runs out of cash paying off her debt

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How can your credit score impact your financial well-being?

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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.

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What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time? Options: Snowball method, Make minimum payments, High rate method, Consolidate multiple debts into one new loan

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High rate method

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Who tracks all of your credit information?

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Credit reporting agencies (Equifax, Experian and TransUnion)

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Which of the following things should you have ready when contacting a credit reporting agency to report an error on your credit report?
Your preferred payment method to pay for fixing the error
A list of all of your financial accounts and balances
An explanation of the mistake and any evidence you have supporting your claim
References from a non-family member vouching for your creditworthiness

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An explanation of the mistake and any evidence you have supporting your claim

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Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?
- Paying your bills on time
- Paying down balances on your credit card accounts
- Decreasing your utilization of credit
- Applying for multiple credit cards

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Applying for multiple credit cards

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Which of the following actions is likely to decrease your credit score?
Options: Paying your bills on-time, Paying down balances on your credit card accounts, Decreasing your utilization of credit, Applying for multiple credit cards

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Applying for multiple credit cards

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Which of these represents a potential consequence of neglecting to pay your federal student loans? Wages or tax refunds can be garnished, Passport revocation, Driver’s license suspension, Termination from your job

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Wages or tax refunds can be garnished

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What benefits do you receive by taking out a loan with a cosigner?

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You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit.