Credit Unit Test!

Which of the following service providers may use credit scores to decide whether a

person can buy a service and/or what price he or she will pay?

• Utility Company

• Car loan lender

• Credit card issuer

• All of these

• Land Lord

Answer explanation

Anyone who wants to know if you are trustworthy with money can check your credit score.

What does credit score mainly indicate?

• Amount of consumer debt

• Financial resources to pay back the loan

• Risk of not repaying the loan

• Knowledge of consumer credit

Answer explanation

Your score shows how trustworthy you are with money.

Who collects the information that makes the basis for credit scores?

• Experian, Equifax, and TransUnion

• Your Parents

• Credit card companies

• Bankers

Answer explanation

FICO collects the data from Experian, Equifax, and TransUnion to make your FICO Score.

Which of the following is considered a low credit score?

• 400

• 600

• 700

• 800

• 100

Answer explanation

Scores range from 300 to 850.

Which of the following helps raise a low score or maintain a high one?

• Reduce the number of open credit accounts at once.

• Keep credit card balances below 50% of the limit.

• Make payments on time

• Apply for more credit cards

Answer explanation

35% of your score is a good payment history.

Credit reporting bureaus decide whether or not I can get credit.

• True

• False

Answer explanation

Reporting agencies just provide your information; the credit provider or lender

makes the decision about whether or not they give you credit.

Credit information can stay on my credit report for over 7 years.

• True

• False

Answer explanation

Credit activity can stay on your report for as much as 7 years while bankruptcy will

stay on your credit report for 10 years.

Having a long credit history is not important to my credit score.

• True

• False

Answer explanation

Your credit history makes up 30% of your credit score.

When I apply to borrow money for a car, the lender will most likely look at my credit

history.

• True

• False

Answer explanation

A lender needs to understand how risky of a borrower a person is and will utilize

credit information to determine the risk.

I need to pursue legal avenues and hire a lawyer if I find incorrect information on my credit report.

• True

• False

Answer explanation

Everyone has the right to question information in a credit report that is believed to be

incorrect. The credit bureau is responsible to investigate this at no cost to the individual.