Credit Score Quiz

Explanation
On a typical auto loan from a bank, a borrower with a low score would likely be charged a higher interest rate and likely pay at least $5,000 more over the life of the loan.

Explanation
Many businesses use your credit score to determine what kind of potential risk you might be when deciding what they will provide to you. You probably already know your score plays a big part in whether a company will loan you money.

But also insurance companies, landlords and even cell phone providers check out your score.

Cell phone companies check your credit score before granting you a service contract. If you´ve got banged-up credit, you may have to pay extra for a service plan or put down a big down payment.

When you apply for a new cell phone contract, the inquiry will impact your credit score. And some cell phone contracts allow the company to review customer credit. If so, your cell phone company could be eyeing your credit at any time. But these follow-up credit checks won´t impact your credit score in any way

Explanation
If you do not have any established sources of credit - credit cards, loans, etc. - lenders might actually consider you a credit risk because they have no information about your history of paying back your creditors.

Paying your bills on time, using varied sources of credit, and building a long credit history can bolster your credit score. If you are considering building your credit, using a credit card and paying off charges in full each month is the most affordable way to establish your credit.

Explanation
Length of credit history accounts for at least 15 percent of your overall credit score, so if you have a number of credit cards and decide you want to close one, selecting the card with the longest history is not the best choice.

The longer you've had a card with a good payment history, the better! The more credit limit you have vs. amount used the better. So closing credit cards can lower that available limit and hurt your score.

Explanation
Negative credit items like late payments, defaults or delinquencies do remain on your credit report for seven years on average.

However, you can begin to rebuild your credit score almost immediately by adding positive items (like on-time payments) to your credit history, thereby diluting the effect of past negative items