Understanding Credit Scores

What is the most common reason for a sudden drop in credit score?

• High credit utilization

• New credit accounts

• Low age of credit

• Missing payments

How much does new credit account for in your credit score?

• 5%

• 10%

• 15%

• 20%

What is the recommended credit utilization percentage to aim for?

• Below 20%

• Below 50%

• Below 10%

• Below 30%

What happens to credit utilization's impact on your score over time?

• It increases

• It remains the same

• It fluctuates randomly

• It decreases

What are the two main components of the age of credit?

• Number of accounts and oldest account

• Average age of credit and credit limit

• Oldest account and average age of credit

• Oldest account and credit limit

How can you maintain a good age of credit?

• Start with a no annual fee credit card and keep it open

• Close old accounts frequently

• Only use one credit card

• Open multiple accounts quickly

What is a credit mix?

• The total number of credit cards you own

• The balance between credit and debit accounts

• A combination of different types of credit accounts

• The ratio of secured to unsecured loans

What percentage of your credit score is affected by payment history?

• 40%

• 25%

• 30%

• 35%

What should you do if you miss a payment by the due date?

• Contact the credit bureau immediately

• Wait until the next billing cycle

• Pay it within 30 days to avoid a credit score drop

• Ignore it

What is the best way to ensure you never miss a payment?

• Set reminders for payment due dates

• Pay only the minimum amount

• Use only one credit card

• Avoid using credit cards altogether