Credit Scores and Financial Literacy

What is the primary factor that affects a person's credit score?

• Payment history
• Length of credit history
• Types of credit used
• Amount owed

Why is payment history particularly challenging for young people?

• They have high incomes
• They have no previous borrowing history
• They always pay on time
• They have multiple credit accounts

How do credit companies obtain payment history information?

• From government records
• From lenders who report to credit agencies
• From individual credit reports
• From social media

What is a good debt-to-income ratio generally considered to be?

• 35% or less
• 50% or more
• 25% or less
• 40% or more

What happens to a credit score if a person closes an old credit account?

• It improves
• It remains the same
• It can decrease
• It becomes irrelevant

Which type of credit is typically viewed more favorably by lenders?

• Revolving credit
• Installment credit
• Unsecured loans
• Payday loans

What does the amount of available credit indicate to lenders?

• A person's income level
• A person's spending habits
• A person's financial stability
• A person's creditworthiness

What can a trend of late payments do to a credit score?

• Improve it
• Have no effect
• Significantly harm it
• Slightly improve it

What is the impact of recent credit applications on a credit score?

• They have no impact
• They can improve the score
• They can negatively affect the score
• They are always beneficial

Why is it important to check a credit score frequently?

• To find new lenders
• To monitor changes in the amount owed
• To apply for new credit
• To increase income