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Credit FL Test 2
| Question | Answer |
|---|---|
| What is a credit bureau? | A company that collects and reports credit information |
| What are the three credit bureaus? | Equifax, Experian, TransUnion |
| What is the range of a good credit score? | 670–739 |
| What is net worth? | The total value of what you own minus what you owe |
| What are ways you can pay off your debt? Select all that apply. | Pay more than the minimum payment each month / Consolidate debts to a lower interest rate / Create a budget and cut expenses |
| What is the percentage of your income that should go towards debt? | 20% |
| What is a form of credit? | Mortgage loan |
| Why do people like to use credit? | It allows purchases now and payment over time, sometimes with rewards |
| What is the purpose of a credit score? | To measure how likely you are to repay borrowed money |
| Who can look at your credit report? | Lenders and landlords with your permission |
| What are some factors that can impact your credit score? Select all that apply. | Payment history / Credit utilization (how much of your limit you use) / Length of your credit history |
| What are reasons why someone would have a low credit score? Select all that apply. | Missed or late payments / Maxed-out credit cards / Limited credit history |
| What are ways that someone can build a good credit score? Select all that apply. | Pay bills on time every month / Keep balances low relative to limits / Check credit reports and dispute errors |
| What does credit history determine? | How responsible you appear to lenders when borrowing |
| What is the difference between a secured and unsecured credit card? | A secured card requires a refundable deposit as collateral, while an unsecured card does not |
| What things can happen if you don’t pay your debt? Select all that apply. | Late fees and interest charges increase what you owe / Damage to your credit score / Accounts may be sent to collections |
| What is a method to establish credit? | Open a secured credit card and make on-time payments |
| What is net worth? | A combination of your assets and liabilities to see how much you're net worth is. |
| What are ways you can pay off your debt? | Pay a little more than average on time / Get a second job / move money to lower rate / cut expensives |
| What is the percentage of you're income that should go towards debt? What is the Max? | 20% average / 35% Max |
| What is a form of credit? | Pay day, mortgage, car, credit line, credit card |
| Why do people like to use credit? | Easy, accessible, benefits, pay back after time, emergencies, future credit |
| What is a credit bureau? | Monitor your spending and payment behaviors |
| What are the three credit bureaus? | Equafax, Experion, Transunion |
| What is the purpose of a credit score? | To help you buy big things and get debt from companies to make sure your responsible |
| What is the range of a good credit score? | 700 - 850 |
| Who can look at your credit report? | Employers, landlords, government, lenders, insurance companies, most need permission from you |
| What are some factors that can impact your credit score? | Not paying bills on time, payment history, how long you been using credit, utilization left. |
| How much is a good utilization score? | 50% or less |
| What are reasons why someone would have a low credit score? | Missed payment, high utilization, number of credit cards open, too many loans |
| What are ways that someone can build a good credit score? | Make monthly payments, low utilization, credit history (the earlier you start the better) |
| What does credit history determine? | How responsible you are with money |
| What is the difference between a secured and unsecured credit card? | A secured card requires a refundable deposit as collateral, while an unsecured card does not |
| What things can happen if you don't pay your debt? | Lost assets, credit score will go down, garnish wages, high interests rates |
| What is a method to establish credit? | Card with another person (parent), secured credit card, get a credit card |
| How long should you wait between opening a new credit card or taking out a new loan? | Six Months |
Created by:
Financial Literacy