Navigating Credit Scores in Personal Finance

The video tutorial explains the concept of credit scores, a three-digit number indicating a person's creditworthiness to lenders. It uses the example of two friends, Leslie and Andy, to illustrate how financial habits impact credit scores and loan rates. Leslie, who is financially responsible, has a higher credit score and gets better loan rates compared to Andy, who is less responsible. The tutorial also covers the typical credit score range, the importance of maintaining a good score, and offers tips on building good credit, such as paying off credit cards in full and maintaining consistent payment habits.

What is a credit score?

• A score given by your employer

• A measure of your annual income

• A three-digit number indicating your likelihood to repay a loan

• A measure of your monthly expenses

Who is more likely to get a better loan rate, Leslie or Andy?

• Both will get the same rate

• Neither, because they have the same job

• Andy, because he spends more

• Leslie, because she is fiscally responsible

What does a credit score take into account?

• Your job title

• Your financial history

• Your age

• Your city of residence

What is the typical range for credit scores?

• 100 to 900

• 400 to 750

• 300 to 800

• 200 to 850

What is considered a good credit score in the United States?

• Below 620

• Around 711

• Exactly 850

• Around 740 and above

What is the average credit score in the United States?

• Around 740

• Around 600

• Around 650

• Around 711

What happens if your credit score is below 620?

• You are automatically approved for loans

• You get a moderate interest rate

• You are prohibited from borrowing any money

• You get the best interest rates

What interest rate might Leslie get if she borrows $1,000?

• 20%

• 15%

• 10%

• 5%

What interest rate might Andy get if he borrows $1,000?

• 5%

• 10%

• 15%

• 20%

Which of the following is NOT a way to build good credit?

• Switching credit cards frequently

• Never missing a payment on a loan

• Paying off your credit card in full every month

• Getting a credit card as soon as possible