GOOD CREDIT IS THE TICKET DO YOU KNOW HOW TO ACHIEVE IT?

TRUE OR FALSE? READ EACH QUESTION AND RESPOND BY CLICKING TRUE OR FALSE CORRECT IS EXCELLENT CORRECT IS GOOD 7-9 CORRECT INDICATES YOU HAVE WORK TO DO LESS THAN 7 MEANS YOU MAY BE SPENDING TOO MUCH FOR CREDIT AND MISS THE BENEFITS EXPLANATIONS ARE PROVIDED AFTER ALL ANSWERS

QUESTION #1 Credit should not be used to purchase furniture and appliances? TRUE OR FALSE?

FALSE Purchasing an item that is expensive and can continue to be used while paying off the bill (like cars, furniture, and appliances) is a good use of credit.

QUESTION #2 Closing a credit card means that the credit card information will no longer be on your credit report. TRUE OR FALSE?

FALSE Even if the account is closed, negative activity from that account can stay on your credit report for as long as seven years. Late payments: 7 years Inquiries: 2 years

QUESTION #3 Many employers use credit reports to determine who they hire. TRUE OR FALSE?

TRUE While a potential employer cannot see your credit score, they routinely access a modified version of your credit report. You must give permission and a letter indicating adverse action must be provided. In a 2012 survey, 47% of the employers polled use credit checks when making a hiring decision.

QUESTION #4 When a car dealer, store, or any other business pulls your credit (credit inquiry) this can harm your credit score. TRUE OR FALSE?

TRUE Inquiries where a potential lender is reviewing your history because you've applied for credit with them can reduce your credit score. These include credit checks when you've applied for an auto loan, mortgage or credit card. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk: people with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than people with no inquiries on their reports.

QUESTION #5 You can always assume you are doing fine financially if you are able to make your monthly debt payment. TRUE OR FALSE?

FALSE A borrower should always be aware of their debt payments-to-gross (before tax) income ratio. Experts declare that a ratio of 36% or less is desirable. Monthly debt repayments divided by your gross monthly income and multiplied by 100.

QUESTION #6 Using a credit card for daily purchases, and paying off the balance at the end of the month, is a healthy way to build credit. TRUE OR FALSE?

TRUE You do not need to carry a balance to build a desirable credit score. Pay your bills on time, 35% of your credit score computation is based on payment history. Do not carry large balances on your credit cards, try to use no more than 20% of your available credit. You do not want to appear like you’re reliant on credit.

QUESTION #7 People with no credit history or poor repayment patterns have no access to new credit. TRUE OR FALSE?

FALSE It is difficult for people with poor or no credit to obtain credit from most banks and credit unions. However, some alternative lenders (payday lenders, pawnshops and rent-to-own programs) do accept such applicants but they will charge significantly higher interest rates than someone with a good credit history.

QUESTION #8 The interest rate and a loan’s annual percentage rate (APR) provide the same information in determining the total cost of any new credit.. TRUE OR FALSE?

FALSE The interest rate is the “rent” you pay while using someone else’s money. The APR expresses the cost of credit on a yearly basis. While a lender may charge a 5% interest rate on a two week period of lending, that translates to an APR in excess of 130%.

QUESTION #9 Closing accounts does not help your credit score. TRUE OR FALSE?

TRUE When accounts are closed, it reduces the ratio between what you owe to the total amount of credit available on all credit cards. That smaller window of credit available is what reduces your credit score.

QUESTION #10 Fair Isaac Corporation, Experian, and TransUnion are the three major credit reporting agencies. TRUE OR FALSE?

FALSE The Fair Isaac Corporation produces the most widely known assessment of credit history called the FICO score. The reports it produces the score from are gathered by Trans Union, Equifax, and Experian.

QUESTION #11 When calculating your FICO score, the credit agency takes into consideration your age, income, and length of time at your current job. TRUE OR FALSE?

FALSE These three things are not involved in the FICO score calculation. What is included are: payment history, amount owed, and length of credit history.

QUESTION #12 When co- signing on a loan for a friend or relative, you are sharing in the liability of having to pay back the loan if the person you are co-signing with does not. TRUE OR FALSE?

TRUE When you co-sign a loan, you are signing a legal contract. If the borrower does not repay, it can be reported on your credit record. If the primary borrower gets behind in payments, the lending institution can hold you and the borrower each equally responsible for repaying the entire debt.

QUESTION #13 It is a smart financial move to use two credit cards for your purchases. TRUE OR FALSE?

TRUE It is smart to use one card for convenience items that are paid in full each month and another credit card for items for which paying off the balance each month is impossible. Use a no-annual-fee card for the convenience purchases and a low-APR card for purchases for which you carry a balance.

QUESTION #14 My credit report can be accessed by potential lenders and employers, but will be generally off-limits to the remainder of the public. TRUE OR FALSE?

FALSE Cell phone companies, electric utilities, landlords, and insurers all routinely review credit reports to determine the risk you present and the size of a security deposit they may require.

QUESTION #15 On a $20,000, 60-month auto loan, a borrower with a low credit score would typically pay $5,000 more than a borrower with a high score. TRUE OR FALSE?

TRUE Borrowers with high FICO scores -- the top tier ranges between 760 and can expect lenders to offer them lower interest rates and more loan choices. Scores of 620 or lower usually place a borrower in the "subprime" category, and they can expect to be quoted significantly higher interest rates and may be offered fewer varieties of loans. A FICO score of about is generally the minimum that will qualify for a mainstream lender.