Intro to Credit/Credit Scores - STUDY GUIDE

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

• Payment history
• Amounts owed
• Length of credit history
• New credit inquiries

Sam is carrying a balance on his credit card of $500. The credit limit on the card is $1,500. What is his utilization rate?

• 0%
• 3%
• 33%
• 50%

Which of the following would appear on a credit report? (Select 3)

• Salary of your current job
• Payment history of your car loan
• Credit card payment history
• Student loan activity

Your teacher tells you about the importance of checking your credit report. Which government-run website allows you to download your credit report for free on an annual basis?

• Freecreditreports.com
• Freecreditreport.com
• getcreditreportshere.com
• annualcreditreport.com

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

• Cancel his credit cards
• Make on-time payments
• Get a car loan
• Check his credit score

Which of the following will help you begin developing a credit history before you graduate from college.

• Always say "credit" when asked "credit or debit?" at a store
• Make small payments on your student loans while in college, even though they are not required to be paid back until you leave
• Any time you borrow money from your parents, friends, or family, be sure to pay it back promptly
• Be sure to keep a bit of your paycheck in a savings account instead of a checking account

Select all of the following that would check your Credit Score: (hint: 3 answers)

• Credit card companies
• Auto loan lenders
• Landlords
• Federal student loan office

Frank and Jasmere are both shopping for a new car. They are looking for a $20,000 loan to pay for the new car that they will pay back over a five year period. Frank has a credit score of 700 and Jasmere has a score of 550. Which of the following statements is TRUE?

• Over the five year period, Jasmere and Frank will pay the same amount for the car loan
• Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment
• Jasmere's monthly payment on the loan will be about $100 more than Frank's payment
• Lenders are not allowed to charge people different interest rates based on their credit scores

How can your credit score impact your financial situation?

• Consumers with high scores can borrow and those with low scores cannot
• Consumers with low scores get lower interest rates on loans than those with high scores
• Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
• It generally has no impact on your financial situation

Which step will have the greatest impact to improve an individuals credit score?

• Not using more than 30% of the credit limit on your card and paying it off in full every month by the due date
• Spend up to the full credit limit on your card and pay off the bill in full every month on time
• Make the minimum payment required on your credit card every month by the due date
• Put the credit card in a drawer and don't ever use it