Podcast
Questions and Answers
What is a significant factor that contributes to the calculation of a credit score?
What is a significant factor that contributes to the calculation of a credit score?
- Household size
- Details about your checking account
- Loan payment history (correct)
- Social media activity
How long do financial records typically remain on a credit report?
How long do financial records typically remain on a credit report?
- 1-2 years
- 12-15 years
- 3-5 years
- 7-10 years (correct)
What does the Equal Credit Opportunity Act prevent?
What does the Equal Credit Opportunity Act prevent?
- Giving loans to everyone equally
- Denying credit based on race, sex, or religion (correct)
- Charging high interest rates
- Offering free credit reports
Why is it beneficial to review your credit report from all three agencies?
Why is it beneficial to review your credit report from all three agencies?
What is a potential drawback of services that promote a 'free credit score'?
What is a potential drawback of services that promote a 'free credit score'?
What is the scale for minimum to maximum possible credit score?
What is the scale for minimum to maximum possible credit score?
Do you ideally want to have a HIGH credit score or LOW?
Do you ideally want to have a HIGH credit score or LOW?
What information is NOT included in your credit report trade lines?
What information is NOT included in your credit report trade lines?
What percent of Americans know their credit score?
What percent of Americans know their credit score?
What is a 'Thin File' in terms of credit?
What is a 'Thin File' in terms of credit?
If you miss a payment with a 750 credit score, how will it impact you compared to a 650 score?
If you miss a payment with a 750 credit score, how will it impact you compared to a 650 score?
Where can you get a free copy of your credit report?
Where can you get a free copy of your credit report?
Why should you review your credit report regularly?
Why should you review your credit report regularly?
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Study Notes
Credit Scores
- Credit score range: 300 - 850
- Higher credit score is better as it helps you get better loans and interest rates
- Lenders use credit reports to determine creditworthiness and risk
- Credit reports contain information on your payment history, loan balances, account opening dates
- It does not include checking account balances
- Reviewing your credit report regularly helps monitor factors affecting your credit score and check for accuracy
- Only about 58% of Americans know their credit score
- "Thin File" refers to a credit report with little credit history
- You can get a free copy of your credit report at AnnualCreditReport.com
Impact of Credit Scores
- Missing a payment has more impact on a higher credit score than a lower score
- It is advisable to request your credit report from all three agencies to ensure accuracy as each agency may have slightly varying data
- Financial records generally remain on your credit report for 7-10 years
- An 18 year-old typically has a thin credit file because they are just starting to build credit
- Some services offering "free credit scores" may charge for updates
- Some credit card companies offer free credit scores to boost cardholder loyalty
Credit Reporting Laws
- The Equal Credit Opportunity Act prohibits denying credit based on race, sex, or religion
- It is important to review your credit report from all three agencies as they each report slightly different data
- Lenders check the credit accounts section of your credit report to evaluate your financial history
Loan Considerations
- When lending money to someone you do not know, it is important to understand the purpose of the loan and their monthly expenses
- Loan payment history is included in your credit report
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