QUIZ: Credit Score Know-It-All or New Kid On The Block?

Are you as credit savvy as you think you are? Did you know that the average consumer credit card debt in July was $6818, or that your credit report could shape the approval and account terms when you apply for a credit card, home loan, and auto loan? If you’ve been keeping up with our blog, you probably know many of the ins-and-outs of the credit world, but take this quiz to see if you have the financial know-how to keep up with your credit health.

1. Income is a key component of your credit score? True or False
2. What state had the highest average credit score in July?
   A. California
   B. Colorado
   C. Illionois
   D. New Jersey
3. What is the amount of credit card debt you currently have divided by your total credit available?
   A. Credit Card Utilization
   B. Credit Card Default
   C. Credit Limit
   D. Credit Charge-Off
4. What are the first two changes of the Credit Card Bill of Rights? Choose two:
   A. 30 day advance notice for arbitrary interest rate increase
   B. Issuers must deliver billing statements at least 21 days before due date
   C. Co-signer necessary for credit card applicants under 21
   D. Double-cycle billing no longer permitted
5. What credit card is best to help consumers start building or rebuilding credit?
   A. Unsecured Credit Card
   B. Student Credit Card
   C. Rewards Credit Card
   D. Secured Credit Card
6. What credit card do you rarely, if ever, want to close?
   A. Any unused credit card
   B. Most used credit card
   C. Oldest credit card
   D. Most recently opened credit card
7. Credit scores can impact your credit limit? True or False
8. Once a creditor charges off an account, the consumer is no longer responsible for payment of the debt. True or False
9. When does the $8000 First-time Homebuyer Tax Credit expire?
   A. November 1, 2009
   B. December 1, 2009
   C. December 31, 2009
   D. January 1, 2010
10. A co-signer on a loan or credit card account can expect to:
    A. Pay-off the account if the primary accountholder cannot
    B. Have the credit line added to their personal credit history and report
    C. Have their credit score affected if the primary accountholder defaults
    D. All of the above

Answers

1. False. Your credit score is determined by several factors including the length of your credit history, on-time payment history, credit utilization, total accounts, and number credit inquiries. Consider using the Credit Report Card to see a summary of your key credit factors as well as how you compare to other Credit Karma members.
2. D. New Jersey. New Jersey’s average statewide credit score for July was 694. Credit Karma’s national average consumer credit score in July was 674.
3. Credit Card Utilization. Credit card utilization basically tells you how much of your available credit you are actually using. Try to keep your total credit card utilization to 30% or less. The credit card utilization ratio of your total debt to available credit determines roughly 30% of your credit score.
4. A & B. One provision of the Credit Card Bill of Rights will be an additional 30 days advance notice for arbitrary rate increases, credit limit change, or any other ‘significant’ change to your credit card’s terms. The other provision to go into effect is that credit card issuers must deliver billing statements at least 21 days before the due date (previously 14 days). These changes go into effect August 20, 2009.
5. D. A Secured Card. A secured card is designed to help consumers build a credit history by providing them the opportunity to demonstrate responsible credit usage and regular on-time payments. A secured card requires a security deposit from the cardholder that functions as cash collateral which sets the credit limit and helps keep consumers from defaulting on their payments.
6. C. The oldest credit card. Age of credit history is a key component of your credit score, so closing your oldest card will likely shorten your credit history and could cause a significant drop in your credit score.
7. True. Credit card companies use a consumer’s credit score as a prediction of how much risk they will be as a cardholder, and determine a cardholder’s credit limit based on this assessment.
8. False. When a credit card company charges-off your debt, meaning they declared it a loss for the company, the consumer is still responsible for paying off the debt. The credit card account will be closed so the cardholder will not be able to charge to it and interest will no longer accrue on that debt, but you will still receive bills until and the creditor will attempt to collect until the entire debt is paid off.
9. B. December 1, 2009. While the deadline is a few months away, consumers are advised to begin shopping for their home now because complications like getting approval for a loan, negotiating a mortgage rate, navigating inspections, managing paperwork with escrow, and the closing process of the Tax Credit could take months to complete and first-time homebuyers definitely do not want to miss out on this opportunity.
10. D. All of the above. As a co-signer, you contractually agree to pay off the account if the cardholder does not and you are obligated to the account until it is paid off in full. Any delinquent actions reported on the account will affect your credit score as if you defaulted on the payments yourself.

Scoring:

If you missed 0-2 questions , you are a credit know-it-all and chances are you have a good credit score. But don’t sit back and think that you and your credit score are safe. Make sure you put your credit know-how to good use by being diligent about keeping your credit health in check.

If you missed 3-4 questions, you are on your way to knowing more about credit. You might know the basics of how credit works, but empower yourself to learn more specifics about your credit report, the Credit Card Bill of Rights, and more details about how to manage your credit score in the process.

If you missed more than 5 questions, you may be a New Kid on the block when it comes to credit. The ins-and outs of credit scores and credit reports may be a bit fuzzy for you. The first step towards getting a good credit score is to understand how credit works, so keep learning and build a more solid foundation of what credit is, how to use it responsibly, and how to maintain healthy credit.