Spotting Credit Crisis
Scenario 1:
You want to purchase a new vehicle and you have your heart set on a brand new SUV. You take out a loan to pay for the car, but after six months you begin to fall behind on payments and incur late fees.
Does your credit score go up or down?
The credit score would decrease.
Why does it go up or down?
It decreases due to the fact that you’re failing to make the payments on the loan that you received for the car loans.
If your score goes down, how can you fix it?
Here are some things you can do to fix your credit score: Avoid jumping credit cards, buy a home (it looks better than renting one), pay bills on time regularly, reduce debt to credit ratio, and dispute things on credit reports that appear to be “incorrect”.
Scenario 2:
You've been eager to buy a new cell phone for months, and now you’re ready to make it happen. You use your credit card to purchase the phone and you set up automatic billing to pay the monthly expenses. At the end of each month, you pay the credit card bill in full.
Does your credit score go up or down?
It will go up
Why does it go up or down?
It will increase because you made the payments on time and you are paying the correct amount, showing that you’re a responsible person when it comes to using credit cards.
If your score goes down, how can you fix it?
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Scenario 3:
Your first semester of college, you take out a small loan to help pay for books. Despite being busy, you get a part-time job. Although you don’t have to pay your loan back until you graduate, you’ve saved enough by the end of the semester and you will pay off the loan in full.
Does your credit score go up or down?
Your credit score would increase.
Why does it go up or down?
It goes up because you are showing that not only are you able to pay off the loan but you can pay it off before the payments are due.
If your score goes down, how can you fix it?
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Scenario 4:
You just got the keys to your first apartment. You also have a new credit card with a $4,000 limit and you use it to furnish your new place. Before you know it, you’ve bought a TV, a couch and a dining room table. When you get the credit card bill, you realize you’ve spent your full credit limit of $4,000.
Does your credit score go up or down?
Your credit score would go down.
Why does it go up or down?
It shows that you’re a “spender” and that you like to buy new thing without paying off the item that you bought before and also that you don’t have self-control because when you see a limit, it doesn't mean that you should spend that much money at one time.
If your score goes down, how can you fix it?
Pay off all money owed to the credit card company, and avoid using credit cards for large payments.
Scenario 5:
You’re planning a trip to Disney World with friends over winter break. You get a credit card offer in the mail that lets you earn airline miles for every $1 you spend, plus bonus miles for opening a new account. Even though you opened three other credit cards this year, you jump on the opportunity and sign up immediately because you haven’t bought your flight to Florida yet.
Does your credit score go up or down?
It decreases
Why does it go up or down?
It decreases because, whenever you open a new account credit card company’s see that as if you can’t pay off things you owe on an existing account especially if you already own three other accounts.
If your score goes down, how can you fix it?
Pay off all loans on time and avoid buying to much on the account.
You want to purchase a new vehicle and you have your heart set on a brand new SUV. You take out a loan to pay for the car, but after six months you begin to fall behind on payments and incur late fees.
Does your credit score go up or down?
The credit score would decrease.
Why does it go up or down?
It decreases due to the fact that you’re failing to make the payments on the loan that you received for the car loans.
If your score goes down, how can you fix it?
Here are some things you can do to fix your credit score: Avoid jumping credit cards, buy a home (it looks better than renting one), pay bills on time regularly, reduce debt to credit ratio, and dispute things on credit reports that appear to be “incorrect”.
Scenario 2:
You've been eager to buy a new cell phone for months, and now you’re ready to make it happen. You use your credit card to purchase the phone and you set up automatic billing to pay the monthly expenses. At the end of each month, you pay the credit card bill in full.
Does your credit score go up or down?
It will go up
Why does it go up or down?
It will increase because you made the payments on time and you are paying the correct amount, showing that you’re a responsible person when it comes to using credit cards.
If your score goes down, how can you fix it?
--------------
Scenario 3:
Your first semester of college, you take out a small loan to help pay for books. Despite being busy, you get a part-time job. Although you don’t have to pay your loan back until you graduate, you’ve saved enough by the end of the semester and you will pay off the loan in full.
Does your credit score go up or down?
Your credit score would increase.
Why does it go up or down?
It goes up because you are showing that not only are you able to pay off the loan but you can pay it off before the payments are due.
If your score goes down, how can you fix it?
--------------
Scenario 4:
You just got the keys to your first apartment. You also have a new credit card with a $4,000 limit and you use it to furnish your new place. Before you know it, you’ve bought a TV, a couch and a dining room table. When you get the credit card bill, you realize you’ve spent your full credit limit of $4,000.
Does your credit score go up or down?
Your credit score would go down.
Why does it go up or down?
It shows that you’re a “spender” and that you like to buy new thing without paying off the item that you bought before and also that you don’t have self-control because when you see a limit, it doesn't mean that you should spend that much money at one time.
If your score goes down, how can you fix it?
Pay off all money owed to the credit card company, and avoid using credit cards for large payments.
Scenario 5:
You’re planning a trip to Disney World with friends over winter break. You get a credit card offer in the mail that lets you earn airline miles for every $1 you spend, plus bonus miles for opening a new account. Even though you opened three other credit cards this year, you jump on the opportunity and sign up immediately because you haven’t bought your flight to Florida yet.
Does your credit score go up or down?
It decreases
Why does it go up or down?
It decreases because, whenever you open a new account credit card company’s see that as if you can’t pay off things you owe on an existing account especially if you already own three other accounts.
If your score goes down, how can you fix it?
Pay off all loans on time and avoid buying to much on the account.