2.1 Credit Basics

Credit Scores run from...

• 0 to 100
• 100 to 500
• 300 to 850
• 500 to 1000

What are the top 3 factors that determine your credit score?

• Payment history, credit utilization, and length of credit history
• Income, net worth, and debt-to-income ratio
• Credit inquiries, credit mix, and credit limit
• Age, education level, and employment status

What is a credit score?

• A report of someone's credit history

• A snapshot of someone's bank account balance

• A summary of someone's annual income

• A document showing someone's tax payments

What do Credit Bureaus do?

• They lend money to individuals and businesses to boost the economy.

• They manage personal bank accounts and transactions.

• They offer investment advice to consumers.

• They keep track credit histories and provide credit scores to lenders.

What is credit utilization?

• Credit utilization is the interest rate applied to loans.
• Credit utilization refers to the number of credit accounts a person has.

• Credit utilization is the percentage of available credit that is currently being used.

• Credit utilization is the total amount of debt owed.

Why It Is Important to Establish Credit While You're Young?

• Establishing credit is only necessary for buying a house later in life.
• You can only build credit after turning 30 years old.
• Having no credit is better than having bad credit at a young age.
• Starting earlier gives longer credit history benefiting your credit score.

What's the difference between Good Debt and Bad Debt

• Good debt is always interest-free; bad debt always has high interest.
• Good debt is used for personal expenses; bad debt is for investments.
• Good debt is short-term; bad debt is long-term.
• Good debt will grow in value over time; bad debt will not grow in value.

What are the 3 credit bureaus?

• Experian, TransUnion, Equifax
• Credit Karma, Expertise, Transactions

• Dun & Bradstreet, Bearstop, Lawson LLC

• FICO, Creditcon, Scoresheet

What is a credit score?

• a three-digit score that tells lenders how much money you make each year.

• A five-digit numerical rating that reflects how likely you are to repay your debt.

• A three-digit numerical rating that reflects how likely you are to repay your debt.

• A credit score is a five-digit numerical rating that reflects how likely you are to fail at paying your debts