AVID I: Understanding Credit Scores

What is the estimated number of Americans without a credit score?

• Approximately 45 million

• About 30 million

• Over 50 million

• Nearly 60 million

Which factor does NOT directly impact your credit score?

• Variety of accounts

• Payment history

• Length of credit history

• Income level

What does a low credit score indicate to a lender?

• The borrower is a high-risk borrower

• The borrower is a low-risk investment

• The borrower has a stable employment history

• The borrower is wealthy

What range do credit scores typically fall between?

• 200 to 800

• 300 to 850

• 250 to 900

• 350 to 900

What was a major flaw in the early credit reporting system?

• It was too simplistic

• It was too technologically advanced

• It included personal character judgments

• It was universally accessible

What legislation began to regulate what could be considered in credit decisions?

• The Dodd-Frank Wall Street Reform and Consumer Protection Act

• The Credit Card Accountability Responsibility and Disclosure Act

• The Equal Credit Opportunity Act

• The Fair Credit Reporting Act

Why might employment history be a proxy for race in credit reports?

• Because it is unrelated to financial behavior

• Because it is the most important factor in credit scoring

• Because it directly includes racial data

• Because of historical hiring practices

How can credit unions or nonprofits help individuals build credit?

• By reporting payments from informal lending circles

• By ignoring credit history in loan decisions

• By offering high-interest loans

• By providing free credit reports

What is a potential solution for those without traditional credit histories to obtain loans?

• Only using cash for transactions

• Paying higher interest rates

• Avoiding credit altogether

• Using rent payment histories

What is one way the credit system could be made more fair according to the video?

• By eliminating credit scores entirely

• By making credit scores public

• By outlawing the use of credit scores for non-lending decisions

• By increasing the number of credit bureaus