Managing Credit - Unit 5

What are the two main factors in calculating your credit score?

• Payment history and types of accounts

• Amounts owed and length of credit history

• Payment history and total debt

• Length of credit history and new credit inquiries

Marco wants to pay off his debt as soon as possible. All of the following would help EXCEPT…

• Reducing spending by canceling some streaming subscriptions

• Taking extra shifts at work to increase his income

• Making more than the minimum payment on debt

• Applying for another credit card to use if he runs out of cash

How does your credit score affect you financially?

• Only people with high scores get credit

• People with low scores get lower interest rates than those with high scores

• Your credit score affects loan approval and interest rates

• It does not affect your finances

Carmine and Lisa each need a $20,000 car loan for five years. Carmine's credit score is 750 and Lisa's is 610. Which statement is TRUE?

• Lisa and Carmine will pay the same amount for the loan

• Carmine's monthly payment will be about $100 more than Lisa's

• Lisa's monthly payment will be about $100 more than Carmine's

• Lenders cannot charge different interest rates based on credit scores

Which strategy helps you pay the least interest when paying off multiple debts?

• Snowball method

• Make minimum payments

• High rate method

• Consolidate debts into one loan

Who keeps track of your credit information?

• Credit reporting agencies (Equifax, Experian and TransUnion)

• Federal government

• Consumer Financial Protection Board (CFPB)

• Lenders

What should you have ready when contacting a credit reporting agency to report an error?

• Your preferred payment method to pay for fixing the error

• A list of all your financial accounts and balances

• An explanation of the mistake and any evidence you have

• References from a non-family member vouching for your creditworthiness

Which of the following could lower your credit score if done quickly?

• Paying your bills on-time

• Paying down your credit card balances

• Using less of your credit

• Applying for several credit cards

What is the Debt Snowball method?

• Pay only your smallest debt first, then the next smallest, and so on

• If your debt gets out of control, hire a credit counselor

• Pay minimums on all debts, then extra money to the highest balance

• Pay minimums on all debts, then extra money to the lowest balance

What can happen if you don't pay your federal student loans?

• Wages or tax refunds can be garnished

• Passport revocation

• Driver’s license suspension

• Termination from your job