Consumer Economics - Managing Types of Credit Review

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

• You might have to spend more money on gas and travel, depending on what you're doing
• Your mental health could suffer as a result of the stress of working more often
• Payment history and total debt
• Incorrect personal information

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...

• Applying for another credit card to use in case she runs out of cash paying off her debt
• It is impossible to have a good credit score without credit history
• Credit reporting agencies (Equifax, Experian and TransUnion)
• Incorrect personal information

All of the following would show up on a credit report EXCEPT...

• Use less than 30% of the credit limit and pay it off in full every month by the due date
• Loan or credit balances that are higher than she anticipates
• Salary of your current job
• AnnualCreditReport.com

Which of the following methods of getting your credit score would involve paying a fee?

• Pros
• Getting a score from myFICO.com
• Make on-time payments
• Your credit report shows your credit history - your relationship with credit in the past - such as loan payments over time, late payments, and bankruptcies. Using the data in this report, your credit score is determined to gauge how likely you are to pay back a future loan.

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

• A longer, positive credit history will lower the interest rates on your loans
• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
• Since you don't have an extensive (or any) credit history, your bank can look back at how you've handled things like your checking and savings accounts to gauge whether or not you're a risky candidate for an introductory line of credit. The more the bank knows about you and your positive financial track record, the more likely they will be to extend to you a line of credit.
• Make on-time payments

Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

• You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit
• Your credit report shows your credit history - your relationship with credit in the past - such as loan payments over time, late payments, and bankruptcies. Using the data in this report, your credit score is determined to gauge how likely you are to pay back a future loan.
• Ask his parents to cosign a credit card or add him as an authorized user on their credit card
• It is impossible to have a good credit score without credit history

Which of the following individuals or groups would be the LEAST likely to look at your credit score?

• Your mental health could suffer as a result of the stress of working more often
• High rate method
• Incorrect personal information
• A bank representative who is helping you open a savings account

You have a credit card that you use regularly for small purchases with the goal of improving your credit score. Which strategy would have the GREATEST positive impact?

• Credit reporting agencies (Equifax, Experian and TransUnion)
• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
• Pros
• Use less than 30% of the credit limit and pay it off in full every month by the due date

What strategy should you use to pay off multiple sources of debt if you want to pay the lowest amount of interest over time?

• Outstanding or missing payments
• High rate method
• Pros
• Wages or tax refunds can be garnished

Who tracks all of your credit information?

• Credit reporting agencies (Equifax, Experian and TransUnion)
• You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit
• Getting a score from myFICO.com
• Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance