Personal Finance · Level 3 of 5 · Intermediate

Credit and debt

Credit scores, credit reports, interest, and paying debt down.

Study notes

Your credit report lists your accounts and payment history. You can get free reports from Equifax, Experian, and TransUnion at AnnualCreditReport.com.
Payment history and amounts owed (credit utilization) are the biggest factors in common FICO scoring models.
Keeping card balances low relative to limits helps. Utilization is the balance divided by the credit limit.
Paying only the minimum on a credit card can take years and cost a lot of interest.
Two payoff methods: avalanche (highest interest rate first, saves the most) and snowball (smallest balance first, builds momentum).

Quiz: 6 questions

Choose one answer for each question, then check your answers. Score 5 of 6 to pass. Then enter your name and email to download a PDF certificate and have a copy emailed to you. Answers are graded in your browser.

1. Where can you get free credit reports from all three bureaus?

AnnualCreditReport.com Any social media app The DMV Your employer

2. A card has a $2,000 limit and a $500 balance. Utilization is:

25% 50% 4% 75%

3. Which factor carries the most weight in common FICO scores?

Payment history Your income Your job title Your age

4. The avalanche method pays off which debt first?

The one with the highest interest rate The smallest balance The newest card A random one

5. Paying only the minimum on a credit card balance usually:

Takes longer and costs more interest Saves the most money Improves your score fastest Cancels the debt

6. Is income listed on your credit report?

No, credit reports do not list income Yes, always Only salary over $100,000 Only for renters

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