See How You Score on Our Credit Savvy Test!

By Jim Garnett, Institute of Consumer Financial Education (ICFE)

1. Using credit can create the illusion that you are living within your means even if you are presently spending more than you make. T or F
2. Late payments are no big deal because the average lender allows two late payments per year before reporting it to the credit bureau. T or F
3. A debit card deducts the amount of your purchase from your checking account immediately. T or F
4. You can “opt out” of having a credit report if you prefer not to have one. T or F
5. A good rule of thumb to follow is “having access to buy means you can afford to buy.” T or F
6. Your payment history is the greatest determination in figuring your credit score. T or F
7. Bad credit cannot affect your ability to get a job. T or F
8. To build good credit, make a small monthly purchase on your credit card and pay the balance off when the statement comes. T or F
9. Your credit score is lowered each time you check your credit report yourself. T or F
10. When you use a credit card, you are borrowing money, not spending money. T or F
11. The rate of interest you pay is determined solely by how much money you make. T or F
12. “AnnualCreditReport.com” enables you to secure your credit report from each of the three major credit bureaus once per year. T or F
13. A judgment remains on your credit report for up to 3 years, and then it falls off. T or F
14. Landlords often check the credit histories of those making application to rent. T or F
15. If you faithfully pay off your credit card balance every month, the interest rate is not an issue. T or F

Answers:

(1) True. To find out if you are really living within your means, put your credit cards away for 2 months and do not use them. (2) False. Every late payment is reported on your credit history and lowers your credit score significantly. (3) True. You must therefore have enough money in your checking account to cover the expense. (4) False. Beginning at age 18, every use of credit will be reported on your credit report, like it or not. (5) False. We have access to buy much more than we could ever afford. (6) True. Payment history comprises 35% of your credit score. (7) True. Employers will check the credit reports of most potential employees. A bad credit history can result in problem situations that carry over to work. (8) True. Lenders are primarily concerned that you make payments on time. (9) False. It does not hurt your credit score to check your own credit report. (10) True. Using a credit card is a similar transaction to taking out a loan. (11) False. Your rate of interest is basically determined by your credit history, not your income. (12) True. This is the only place to acquire a free credit report annually, no strings attached. (13) False. Judgments remain on your credit report for 10 years, and if re-executed by the lender each cycle, can remain an unlimited time. (14) True. The way you have paid your bills in the past is a predictor of how you will pay your bills in the future. (15) True. If you pay off the statement balance each month, you will not incur finance charges, so it does not matter the rate of interest.

Correct Answers:

14-15 – Good job! You will avoid most credit pitfalls.
11-13 – You will be okay in most credit situations but proceed with caution.
6-10 – You are in great danger of making some big credit mistakes. Visit www.christiancreditcounselors.org to learn how credit works and access our free educational resources.
0-5 – Stick to cash transactions or prepaid cards. For more credit help, contact Christian Credit Counselors at 800-557-1985!