Take the Alvarado Real Estate Group's monthly quiz and find out if you know what impacts your credit score: According to credit experts, 42% of U.S. consumers have credit scores between 550 and 699. As a result, these consumers typically don't qualify for preferred interest rates and, depending on their overall credit profile, they may not even qualify for certain loans and credit cards.
As a Madison WI Real Estate Broker, I have worked with many home buyers and sellers throughout my years in the business and have seen first-hand how credit scores can really upset the opportunity of securing a favorable mortgage. Most clients I work with don't have a clear picture of what impacts their credit profile and, more importantly, don't know what steps they can take to help improve it. I find this short quiz, from credit consultants ApprovalGuard.com, to be very helpful when it comes to understanding how your credit profile works.
1. To have the best credit-profile impact, what is the maximum amount of your monthly credit line that should be used?
a) 70% b) 30% c) 50%
2. What is the number-one contributing factor to a good credit score?
a) Length of credit history b) Amounts you owe c) Payment history
3. If you pay 2% each month on your credit card (typical minimum payment), when will you pay off a $3,000 balance at 10% interest?
a) 18 years b) 6 years c) 3 years
4. After paying off a high-interest credit card, you should:
a) Continue using it occasionally b) Close the account c) Use the full amount of available credit every month
5. Applying for credit cards in order to just receive a free sign-up gift (t-shirts, mugs, etc.) has no impact on my credit profile?
True or False
6. Rewards points on credit cards are a good deal when:
a) I get cash back b) I get free airline tickets c) I carry no balance each month
7. To have a credit score, I must have at least one creditor reporting activity on my credit report for:
a) 12 months b) 8 months c) 6 months
8. Credit bureaus that manage your personal credit report data and credit scores are a:
a) Government entity b) Non-profit agency c) Regular business corporation
9. Banks and credit card companies think you are creditworthy by how many credit offers you receive by mail?
True or False
10. Credit scores are used by lenders mainly to:
a) Tell how I compare to other consumers b) Tell if I make my payments on time c) Predict the likeliness that I will repay my loan on time
Answers: 1 - c, 2 - c, 3 - a, 4 - a, 5 - False, 6 - c, 7 - c, 8 - c, 9 - False, 10 - c
If you find you answered more than half of these questions wrong, you're not alone. ApprovalGuard says that the majority of consumers do not know the answers to these and similar types of questions. The good news is it's not too late. With a good understanding and proper guidance of how credit works, consumers can learn how to effectively manage their personal credit profile. For more information, you can email me at firstname.lastname@example.org and since I'm not a credit expert, I can connect you with the right person if I can't answer your question(s). Please feel free to forward this quiz to others.
From a local Madison WI perspective, credit discussions come up a lot in conversations about short sales and foreclosures. This is a hot topic because there are so many factors in understanding your best options if you are in financial distress. And I'll save that for another post so stay tuned!