A credit score may be the most important number that relates to your financial future. Loans for cars or houses, rental agreements and even insurance premiums all depend on your credit score. But what does the number actually represent, and how can you best improve your credit score? Take this quiz to find out.
How many digits are in your credit score?
Why were credit scores originally not disclosed to consumers?
to ensure its accuracy
to save money
When did credit scores first become available to consumers in the United States?
What does the term FICO stand for?
Fair Isaac Corporation
Financial Investigation Commentary
Fixed Income Credit Organization
How many major U.S. credit bureaus are there?
What is the range of FICO credit scores?
What aspect of your credit report weighs most heavily in determining your credit rating?
cash on deposit
At what percentage of your available credit should you ideally keep your credit card accounts?
25% or less
Why does a longer credit history translate into a higher credit score?
because more information means greater accuracy
because you have more time to lower your outstanding debts
because it indicates greater financial responsibility
What is a soft inquiry on your credit report?
checking your own score
multiple inquiries by different lenders within a short span of time
a request for credit below $1,000
If you have multiple different types of credit accounts, what affect will that have on your credit score?
What is the BEACON system?
one credit bureau's application of the FICO number
an upstart scoring system that is a challenge to FICO
a system of applying your FICO score to determine the likelihood that you will default on a loan
What is the relationship between credit score and interest rate on a loan?
A higher credit score gives you a lower interest rate.
A higher credit score gives you a higher interest rate.
The two are unrelated.
In addition to your FICO score, what else might raise your interest rate on a loan?
the length of the loan repayment schedule
the size of the loan
where you live
Why are insurance companies interested in your credit score?
People with lower credit scores are more likely to file insurance claims.
They want to know how likely you are to upgrade your insurance plan.
People with higher credit scores are typically in better health.
What is the result of universal default?
A default on one loan can affect the interest rate of another.
A default on a loan can prevent you from ever getting credit again.
A payment that is over 60 days late can place the entire loan into default status.
If you want to improve your credit score, what should you do with an old account that you no longer use?
Keep it, even if you don't plan to use it.
Start using it at least once every three months.
What single action can most improve your credit score?
consistent on-time payments
reduced credit balances
opening new credit card accounts
If you are shopping for the best rate on a loan, what should you do to ensure that your credit score won't be negatively affected?
Make sure all inquiries happen within a few weeks of each other.
Ask the lenders to not check your credit score until you decide to take out the loan.
Limit yourself to no more than three potential lenders.
What is different about the FICO '08 formula of credit scores?
It does not reward those who are listed as authorized users on the accounts of others with healthy credit.
It prevents insurance companies from applying FICO scores to their premium rates.
It no longer takes into account the number of recent inquiries for your credit.