Credit | Practical Money Skills

Credit

Considering credit over cash? Credit cards can be a convenient and flexible form of payment, but they have to be used responsibly in order to make the most of your money. Though credit cards allow you to purchase items instantly without using cash, it’s important to use your cards as carefully as you would handle your cash.

Before getting a credit card, first define your financial lifestyle and search for a card that fits with your situation and spending habits. After choosing a credit card, take time to understand its features and how it can affect your credit score.

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Quick Quiz

Before exploring more about credit, test your existing knowledge with this short quiz. Discover how much you already know about credit cards and credit history and learn how you can improve. Then, take advantage of informative resources tailored to your results.

1
What are the three major credit bureaus in the United States?
A
Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, FICO
B
Better Business Bureau, Federal Trade Commission, Consumers Union
C
Experian, Equifax, TransUnion
D
IRS, Franchise Tax Board, National Consumers League
Correct!

Experian, Equifax and TransUnion are the three major credit bureaus in the United States.

Not quite.

Experian, Equifax and TransUnion are the three major credit bureaus in the United States.

2
For up to how many years can a bankruptcy stay on your credit report?
A
5 years
B
3 years
C
10 years
D
2 years
Correct!

Bankruptcy can stay on your credit report for up to 10 years.

Not quite.

Bankruptcy can stay on your credit report for up to 10 years.

3
What three main factors are used to calculate your credit score?
A
Your income, debt and monthly expenses
B
Your payment history, money owed and credit history
C
Your earning potential, income taxes and monthly expenses
D
Your payment history, annual income and total debt
Correct!

Your credit score is calculated based on your payment history, money owed and credit history.

Not quite.

Your payment history, money owed and credit history are used to calculate your credit score.

4
Which of the following is true about credit repair companies?
A
They can "clean up" your credit by removing negative information
B
They can only legally dispute inaccurate information on a credit report
C
They help you legally create a new credit history
D
They do a better job if you pay them more money
Correct!

Credit repair companies can only legally dispute inaccurate information on a credit report, which you may also do yourself for free.

Not quite.

Credit repair companies can only legally dispute inaccurate information on a credit report.

5
What does a credit score help a lender determine?
A
How much money you owe
B
Your monthly income
C
Your savings rate
D
Your reliably to pay back money you owe
Correct!

Your credit score helps a lender determine your reliably to pay back money you owe.

Not quite.

Your credit score helps a lender determine your reliably to pay back money you owe.

Your Score

Nice job!

You’re a credit whiz — check out these tips to stay successful.

Nice job!

You’re on the path to becoming a credit whiz — check out these resources to become even more knowledgeable about credit.

Too Bad!

You’re a newbie with lots of credibility potential — check out these resources to improve your credit knowledge.

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How Much Do You Know About Credit?

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