The Ultimate Ways to Build Credit Quiz

Estimated Completion Time
3 min
The Ultimate Ways to Build Credit Quiz
Image: David DeLossy/Getty Images

About This Quiz

Some people have never applied for credit, whereas others are trying to rebuild their credit rating after bankruptcy or years of defaulting on payments. It can be difficult to establish good credit, but hope is not all lost. Take this quiz and find out how you can be credit healthy.
How do lenders determine your credit history?
credit scores
credit reports
both of the above
Correct Answer
Wrong Answer

From Fortune 500 companies to the average Joe, the majority of the population uses credit. A lender, such as a credit card company, can determine your credit history by either getting your credit score or a credit report.

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How many Americans have no credit history?
25 million people
50 million people
75 million people
Correct Answer
Wrong Answer

It is possible to live like 50 million other Americans, only using cash for money transactions. But some big ticket purchases may require credit, such as higher education, a home and a car.

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If you don't have any credit, what should you do before you attempt to apply for a credit card?
Make sure you don't have an open file with a credit report agency.
Open a checking account with your local branch.
both of the above
Correct Answer
Wrong Answer

Before you apply for a credit card, make sure you are not a victim of identity theft. Do this by contacting all credit report agencies to make sure you don't have a open file with them.

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How often should you check your credit rating?
every six months
once a year
every five years
Correct Answer
Wrong Answer

It is recommended that you check your credit rating once a year, and scan the document for any errors.

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How many American children and adolescents were victims of identity theft in 2008?
1,000 children and adolescents
10,000 children and adolescents
20,000 children and adolescents
Correct Answer
Wrong Answer

People that have no credit rating are at risk of identity theft, such as children and adolescents. In 2008, 20,000 children and adolescents had their identities stolen.

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How can you prove financial responsibility without owning credit?
Open a bank account.
Have your name added to your parents' credit card.
both of the above
Correct Answer
Wrong Answer

Your checking and savings account information is typically requested when you apply for credit. By opening a bank account, you can demonstrate financial responsibility to credit lenders.

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Besides your credit activity, what other information is included in your credit report?
your checking and savings account information
whether your bank account goes in the red
both of the above
Correct Answer
Wrong Answer

It's important that your bank accounts don't go in the red, such as a bounced check. This information does make it onto your credit report and it can affect your credit rating.

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What is a credit score?
a three-digit number
a four-digit number
a five-digit number
Correct Answer
Wrong Answer

The most popular credit score is a three-digit number called the FICO score, which is produced by Fair Isaac Credit Services.

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What is a FICO expansion score?
It's a credit rating that also includes your bank account activity.
It's a credit rating that also includes your bill payments.
both of the above
Correct Answer
Wrong Answer

Most credit reports do not include your bill payments. The FICO expansion score, however, provides lenders with information regarding your due-diligence in paying your bills on time.

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What happens to my co-signer's credit rating if I don't make payments on time?
Your co-signer's credit will be unaffected.
Your co-signer's credit will be less affected than your credit.
Your credit and your co-signer's credit will be equally affected.
Correct Answer
Wrong Answer

There are several benefits to having a co-signer, especially when you don't have credit of your own. Keep in mind, however, your co-signer's credit is equally as tarnished if you don't make timely payments.

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What is a secured credit card?
It's the same thing as a debit card.
It's a credit card that is co-signed with a secured credit card holder.
It's a credit card that has collateral in a bank.
Correct Answer
Wrong Answer

A secured credit card is a great way to build credit. A secured credit card has collateral in an associated bank account and your credit limit equals the amount of collateral that you have in this account.

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How long must you use a secured credit card before a lender will transfer you to a regular unsecured credit card?
six to 12 months
12 to 18 months
18 to 24 months
Correct Answer
Wrong Answer

After using a secured credit card successfully for 12 to 18 months, most secured credit card lenders will allow you to hold an unsecured credit card.

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What should you watch out for when using a secured credit card?
Secured credit cards tend to have higher interest rates and fees.
Make sure the secured credit card company reports to all credit agencies.
both of the above
Correct Answer
Wrong Answer

Try not to keep a balance on a secured credit card to avoid paying high interest rates and fees. Also, make sure the secured credit card company reports to all credit agencies, so that you can improve your credit rating with all three agencies.

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Why should you avoid getting several retail credit cards?
Store claims of saving money on their retail credit card are misleading and false.
Your credit rating will suffer.
both of the above
Correct Answer
Wrong Answer

Every time you apply for credit, a credit report is generated. If you apply for too many retail credit cards in a short period of time then too many credit reports will be generated, which will ultimately lower your credit rating.

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How do you build healthy credit with an unsecured credit card?
You need to make at least the monthly minimum payment on time.
You shouldn't have an outstanding balance month to month.
You shouldn't use it altogether.
Correct Answer
Wrong Answer

To maintain a good credit rating, you must, at the very least, pay your monthly minimum payment on time. It's even better if you can pay the total amount owed from month to month.

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Besides defaulting on monthly payments, what else can harm your credit rating?
carrying a high outstanding balance
never paying more than the minimum
both of the above
Correct Answer
Wrong Answer

You can further tarnish your credit rating if you keep a balance over 30 percent of your credit limit. So, if your credit limit is $1,000, your outstanding balance should not go over $300.

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What is an example of installment credit?
student loan
credit card
credit line
Correct Answer
Wrong Answer

Installment credit involves paying off a loan in set installments, such as in a student loan, mortgage or car loan.

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What are lenders looking for when they examine your employment history on your credit report?
your employer
employment stability
both of the above
Correct Answer
Wrong Answer

Lenders want to see that you can keep a job and that your salary is slowly going up. This shows lenders that you are in a good position to use credit.

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What is one of the most important factors when you are being considered for a mortgage?
your employment stability
your salary history
the number of credit cards you own
Correct Answer
Wrong Answer

Your salary history is a very important factor when determining your suitability for a mortgage. When applying for a mortgage, you will likely have to provide proof of your salary history through pay stubs and income tax forms.

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How long will your credit report be tarnished if you file for bankruptcy?
for five years
for 10 years
for life
Correct Answer
Wrong Answer

Bankruptcy should be avoided at all costs. You will not be able to reestablish any credit for 10 years.

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You Got:
/20
David DeLossy/Getty Images