UGBA 135 Midterm
FICO Score - correct answer measure of consumer credit risk
Highest FICO Score - correct answer 850
Factors determining FICO Score - correct answer Credit report is based on:
-35% paying your bills on time over time
-30% your debt-to-credit ratio ( borrowing money/ credit limit)
-15% length of credit history
-10% mix of credit cards and loans (like to see things other than credit card; Rent, any loan (e.g. leasing
car))
-10% new accounts and recent applications for credit
How many FICO scores does a person have? - correct answer 3
How do you establish good credit? - correct answer borrow $ and pay it back on time according to its
terms
How much is taken out of your paycheck for SS and Medicare? - correct answer -12.4% of earned income
to SS
-2.9% of earned income to Medicare
Debt-to-credit ratio - correct answer how to calculate:
-$3000 debt, $6000 in credit :: 3000/6000 = 50% D/C ratio
-try to be below 50% || 30% is the best
,Identity Theft: if you're a victim - correct answer -close and replace all accounts that have been
tampered with or didn't open
-file a police report
If you are carrying a balance and you pay more than the minimum payment, where does the excess go? -
correct answer the excess is used to pay off debt of highest interest rate, not the card with the smallest
balance
credit hold on account - correct answer -when a customer is consistently late in making payments, has
exceeded their credit limit, or is identified as a bad risk, you can prevent additional credit purchases by
placing their account on credit hold
-if hold is executed, it will count against credit
Maximum interest on credit card account - correct answer no legal maximum
Who can see your credit scores? - correct answer
Website for free credit report (federally mandated for credit reports) - correct answer
annualcreditreport.com
Three credit scoring agencies - correct answer Transunion (tuc.com) -- Empirica score
Equifax (equifax.com) -- Beacan score
Experian (experian.com) -- Experian model
Best time to establish credit - correct answer when you don't need it
aka younger i thinks
When are your credit payments due? - correct answer generally about 21-25 days after your billing cycle
ends
Secure vs unsecure line of credit - correct answer Debit is secure
, Credit is unsecure (nothing to back it up other than credit history)
How does cancelling inactive credit cards affect your credit score? - correct answer -can lower because it
will increase your d/c ratio
-if you cancel, cancel newest card first
Prepaid cards - correct answer -offered by banks and nonbanks
-not linked to bank accounts
-fees: activation, inactivity, to load money onto cards, if you don't load money each month, check
balance info, to use an ATM for cash, for using a check to close an account
Cash advance - correct answer -using your credit card to withdraw cash
-higher interest rates, no grace period (incur interest rates right off the bat)
grace period - correct answer set length of time after the due date during which payment may be made
without penalty
What is a retail charge card? - correct answer -a credit card issued by a retailer allowing you to charge
purchases made only with their store
-higher interest rate 20-30% on unpaid balances
-no grace period and interest begins on date of purchase
-credit score can be lowered if you cancel card
Can you increase credit score by increasing your credit limit? - correct answer Yes, only if you stay below
a 50% debt-to-credit ratio on each credit card. 30% ratio is the best for top scores. Increase credit limit to
lower credit ratio
How often are credit card balances calculated? - correct answer daily
Credit report vs Credit score - correct answer -credit report: individual report card telling you if you have
been making CC and loan payments on time and personal info
FICO Score - correct answer measure of consumer credit risk
Highest FICO Score - correct answer 850
Factors determining FICO Score - correct answer Credit report is based on:
-35% paying your bills on time over time
-30% your debt-to-credit ratio ( borrowing money/ credit limit)
-15% length of credit history
-10% mix of credit cards and loans (like to see things other than credit card; Rent, any loan (e.g. leasing
car))
-10% new accounts and recent applications for credit
How many FICO scores does a person have? - correct answer 3
How do you establish good credit? - correct answer borrow $ and pay it back on time according to its
terms
How much is taken out of your paycheck for SS and Medicare? - correct answer -12.4% of earned income
to SS
-2.9% of earned income to Medicare
Debt-to-credit ratio - correct answer how to calculate:
-$3000 debt, $6000 in credit :: 3000/6000 = 50% D/C ratio
-try to be below 50% || 30% is the best
,Identity Theft: if you're a victim - correct answer -close and replace all accounts that have been
tampered with or didn't open
-file a police report
If you are carrying a balance and you pay more than the minimum payment, where does the excess go? -
correct answer the excess is used to pay off debt of highest interest rate, not the card with the smallest
balance
credit hold on account - correct answer -when a customer is consistently late in making payments, has
exceeded their credit limit, or is identified as a bad risk, you can prevent additional credit purchases by
placing their account on credit hold
-if hold is executed, it will count against credit
Maximum interest on credit card account - correct answer no legal maximum
Who can see your credit scores? - correct answer
Website for free credit report (federally mandated for credit reports) - correct answer
annualcreditreport.com
Three credit scoring agencies - correct answer Transunion (tuc.com) -- Empirica score
Equifax (equifax.com) -- Beacan score
Experian (experian.com) -- Experian model
Best time to establish credit - correct answer when you don't need it
aka younger i thinks
When are your credit payments due? - correct answer generally about 21-25 days after your billing cycle
ends
Secure vs unsecure line of credit - correct answer Debit is secure
, Credit is unsecure (nothing to back it up other than credit history)
How does cancelling inactive credit cards affect your credit score? - correct answer -can lower because it
will increase your d/c ratio
-if you cancel, cancel newest card first
Prepaid cards - correct answer -offered by banks and nonbanks
-not linked to bank accounts
-fees: activation, inactivity, to load money onto cards, if you don't load money each month, check
balance info, to use an ATM for cash, for using a check to close an account
Cash advance - correct answer -using your credit card to withdraw cash
-higher interest rates, no grace period (incur interest rates right off the bat)
grace period - correct answer set length of time after the due date during which payment may be made
without penalty
What is a retail charge card? - correct answer -a credit card issued by a retailer allowing you to charge
purchases made only with their store
-higher interest rate 20-30% on unpaid balances
-no grace period and interest begins on date of purchase
-credit score can be lowered if you cancel card
Can you increase credit score by increasing your credit limit? - correct answer Yes, only if you stay below
a 50% debt-to-credit ratio on each credit card. 30% ratio is the best for top scores. Increase credit limit to
lower credit ratio
How often are credit card balances calculated? - correct answer daily
Credit report vs Credit score - correct answer -credit report: individual report card telling you if you have
been making CC and loan payments on time and personal info
