1. What is a credit score? Credit score is a number ranging from 300-850 that depicts a consumer's creditworthiness. The higher the credit score, the more attractive the borrower.
2. What does a credit score say about you? A credit score is more than just a number. It represents how reliable a borrower you are and how well or poorly you manage your debt. Your credit score shows how responsible you have been with your credit card, so if you have a high credit score you are a responsible credit card user. If you have a low credit score you are not that responsible.
3. What is the purpose of having credit? The purpose of having credit is when consumers and businesses can borrow money, economic transactions can take place efficiently and the economy can grow. Credit allows companies access to tools they need to produce the items we buy. A business that could not borrow might not be able to buy machines and goods, or pay the employees it needs to make products and profit.
4. What is the lowest and highest credit score one can have? Since credit score ranges from 300-850 the lowest credit score someone can have is 300, and the highest credit score would be 850.
5. What factors affect your credit score? a. Why is it important to have good credit? How can you maintain good credit? b. How can having bad credit affect your life? The factors that affect credit score are payment history, which is one of the most important credit scoring factors. Credit usage, which is one of the factors that you may be able to change quickly to improve or hurt your credit health, is the amount you owe on installment loans. The length of credit history, like opening new accounts could lower your average age, which may hurt your scores. Credit mix and types, which having experience with different types of credit, like revolving credit card accounts and installment student loans, may help improve your credit health. Finally, recent credit, creditors may review your credit reports and scores when you apply to open a new line of credit. It is important to have good credit because it helps you save money and make your financial life much easier. For example, with good credit you can have better interest rates on credit cards and loans, negotiating power, and more. Ways of maintaining good credit are paying bills on time, keeping credit card balances low, managing debt, and limiting applications for new credit. Having a bad credit affects you by not having low interest rates, credit and loan applications not being approved, getting denied for contracts, difficulty starting your own business, and purchasing things.
6. How can you obtain credit? To obtain credit a person can establish banking relationships, open checking and savings accounts, apply for department store card or gas card, or a secured credit card, and consider a co-signer or co-applicant.
7. How can you build up your credit? Building credit is almost the same as obtaining credit. To build credit one can get a secured credit card, get a credit-builder loan or a secured loan, use a co-signer, become an authorized user, and get credit for the bills they pay.
8. Based on the “Cost Of Living” Worksheet, in what ways can your credit impact your future life? Based on the "Cost of Living" Worksheet, credit can impact my future life in a bad way because I went over budget and ended up in debt, I would lose many of the perks that come with good credit, and credit card companies would not approve contracts.
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