Test Your Credit IQ
"Do your Homework!" Chances are, your parents gave that command a time or two when you were growing up. And while you may not have to "solve for x" or show state capitals on the map as an adult, that sage advice from your parents still applies, especially when it comes to credit. The more you know about credit, the more you can save and the easier it will be for you to borrow.
So, let's start with a little quiz to see how much you know:
1. What does a credit score measure?
A) How likely you are to repay a debt
B) Your net worth
C) All of the above
D) None of the above
The answer is A. Your credit score allows lenders to determine whether to give you credit, decide the terms you are offered, or the rate you will pay for the loan.
2. Your credit score is made up of the following:
A) Payment history
B) Amount owed
C) Length of credit history
D) New credit account applications
E) Types of credit used (mortgages, credit cards, car loans)
F) All of the above
The answer is F, all of the above.
3. What is considered a good credit score?
The answer is D, 700. Credit scores range from 300 – 850. A credit score of 700 or above is considered good.
4. A good credit score can save you money.
The answer is A, true. A good credit score can lead to a lower interest rate, which can save you money.
5. Which of the following is NOT one of the three major credit bureaus?
B) American Express
The answer is B, American Express. The three major bureaus, Equifax, TransUnion, and Experian produce the credit reports that are used to build your credit score.
What's the score?
How did you perform? If you didn't ace the test, you can do your homework and learn more about credit by visiting https://www.usa.gov/credit-reports.