The Ultimate Hurting Your Credit Score Quiz

Staff

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About This Quiz

Sticks and stones may break your bones, but a bad credit name will also harm you. How much damage can you cause to your own credit score if you're not careful? Take this quiz to get the answers.

What is a common way to improve your credit score?

A common -- but not always easy -- way is to pay your bills before their due date.

How long can it take to damage your credit score?

It can happen in a flash. For example, if you don't pay a hefty overdue fine on a library book, a collection agency can end up dunning you for the outstanding fee and, boom, you've lost credit.

Where is debt-free living discussed?

Among many other places that this is discussed, debt-free living is discussed on radio shows and Web sites. Chances are, though, it's not done at PTA meetings or with your bank manager!

What findings do some studies conclude regarding credit scores?

According to some studies, the figures may not necessarily be an accurate measure of credit worthiness.

A library book that you haven't returned could cost you how many credit points?

It could knock off 100 points out of a maximum of 850.

You are spending too much so you decide to cancel one credit card. Does this damage your credit score?

Here's the weird rule. If you cancel a credit card in order to reduce your spending, you may be damaging your credit rating. Go figure!

How do credit bureaus use your available credit and your debt to determine your credit score?

They go according to the ratio between your credit (which may have a high limit) and your debit (how much you owe).

Which of these companies created the industry standard for credit models?

Fair Isaac Corporation developed all kinds of algorithmic credit models. Hence, a FICO score.

What kind of debts affect your credit score more, old debts or new ones?

Old debts seem to be less problematic than new ones. And trying to rectify old ones can actually harm your credit worthiness.

How does contacting a collection agency to rectify an old debt go against you?

It appears as recent or new activity. Thus, what was an "old" debt becomes new baggage and damages your credit score.

If a third of your credit score is based on your credit history, will late payments be positive or negative in terms of your score?

Late payments are the ultimate no-no. That's probably the worst you can do to harm your credit score.

After six months of unpaid bills, a credit card company will turn the problem over to a collection agency. They'll write off your debt and call it a:

They call it a charge-off; an ambiguous term, which might also mean that they charge off to the local collection agency and report you.

For how many years can a charge-off appear in your credit history?

It can be reported only for seven years. That might be good news for some, depending on who you are.

You're in debt so you close your account. What happens then?

You still have to pay back every cent, but you don't have a credit limit.

Late payments can create a ripple effect with regard to damaging your credit score. What is the effect sometimes called?

It's called a domino effect. It starts with a mere late payment, which causes a hounding from a collection agency, then poor credit history and so on.

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