10 Questions To Test Your Credit Savvy

By Carrie Davis, on August 18, 2009

You may know that your credit report and credit score are important, but do you know why? And do you know how to improve them? Instead of giving you another boring list, here are 10 quick quiz questions to test your credit quotient. Write your answers down on a piece of paper and check them against the answers provided below. When you’re done, let us know how well you did.

1. What is the factor that most influences your credit score?

1. Level of debt
2. Payment history
3. Number of open accounts

2. You should cancel credit card accounts that you no longer use.

1. True
2. False

3. Each time you check your credit, you score suffers slightly.

1. True
2. False

4. A good credit score these days is anything over:

1. 650
2. 700
3. 740

5. What is the average FICO score in the U.S.?

1. 592
2. 620
3. 678

6. The credit score you can buy from the credit bureaus or MyFICO.com is the same score that lenders use to judge you.

1. True
2. False

7. Your creditors are legally required to send your account information to the credit bureaus.

1. True
2. False

8. If your credit card balance is $10,000, and the APR is 20%, you’ll pay roughly how much in interest (assuming you only make minimum payments)?

1. $2,000
2. $5,000
3. $11,000

9. To know if you are a victim of identity theft, you should check

1. Your monthly credit card statements
2. Your monthly bank statements
3. Your credit report
4. All of the above

10. Your employer can pull your credit report when you apply for a job.

1. True
2. False

How’d you do? Check your answers here:

1. (2) Payment history — Paying your bills on time is the most important factor when it comes to calculating your credit score.

2. (2) False — In most cases, cancelling unused accounts means you will have less overall credit available to you, which hurts your credit score. Also, cancelling old accounts might shorten your credit history, also hurting your score.

3. (2) False — Checking your own credit report or score is known as a “soft inquiry” or “soft pull” and has no effect on your score.

4. (3) 740 — Lenders are becoming increasingly strict in their credit score requirements. Only those with the best scores will have access to the lowest interest rates.

5. (3) 678

6. (2) False — Most of the credit scores sold to consumers are “educational scores,” while lenders use what are called “lender scores.” Educational scores are generic, all-purpose scores to give you a good idea of where you stand. Lender scores are often more loan-type specific. For instance, mortgage lenders may put more emphasis on your mortgage history. Also, each lender may have its own scoring formula that takes your income and other factors into account. For more on this topic, check out Consumer vs. Lender Credit Scores.

7. (2) False — Creditors and lenders voluntarily supply information about your accounts to the credit reporting agencies.

8. (3) $11,000 — If you only make the minimum payments, it will take you more than nine years to pay off that $10,000 of debt. And you’ll spend $11,680 on interest in the process. Find out how much your debt will cost you with a cost-of-debt calculator.

9. (4) All of the above — Your monthly bank and credit card statements will show any fraudulent transactions an identity thief has made with a lost or stolen credit or debit card number, while your credit report will show unauthorized credit inquiries and account openings. Enrolling in a credit monitoring service saves you the hassle of having to remember to check your credit manually.

10. (1) True — but only with your written permission. The employer must provide you with a separate document asking for your permission to check your credit. If you don’t get the job due to negative information in your credit report, the employer must provide you with a copy of your report and a summary of your consumer rights under the Fair Credit Reporting Act.

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Carrie Davis is the lead columnist for SpendOnLife.com, an online resource dedicated to ensuring readers have the latest and most thorough information on credit, debt, and identity theft. She has a passion for educating others on how to achieve financial independence. Follow Carrie through the SpendOnLife RSS feed or on Twitter @SpendOnLife.

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