Credit Quiz - Check out whether or not you can score 10/10

Do you think you know everything about credit report and score? Take this quiz to test your knowledge so that you know the right steps to take in order to have a healthy credit record and good score.

Here are 10 questions. Be honest and give yourself '1 Point' when you answer a question correctly.

1. How many digits are there in a FICO credit score?

1. One
2. Two
3. Three
4. Four

The correct answer is: C. Three
A FICO score is represented in a scale ranging from 300 to 850.

2. Do you have more than one credit score?

1. Yes
2. No

The correct answer is: A. Yes
There are actually several credit scores. However, there are mainly three credit bureaus - Experian, Equifax and TransUnion. Each of the credit reporting agencies collect and report information independently and everyone might not have the same information regarding how you manage credit. For example, a collection on an account might be visible in one of the reports but it might be absent from the other reports. Moreover, there are different types of credit scores available. For example, an insurance company might use credit-based insurance score to predict how likely you are to file claims.

3. Which of these is not taken into consideration while calculating your FICO score?

1. Types of credit you have
2. How much you owe to your creditors
3. How much you earn every month
4. Length of your credit history

The correct answer is: C. How much you earn every month
While calculating your FICO score, your monthly or annual income is not taken into consideration. FICO model considers the following factors to compute your credit score:

• Types of credit you have
• How much you owe to your creditors
• Length of your credit history
• Your payment history
• New credit

4. Which amongst these may check your credit score?

1. Credit card issuer
2. Cell phone company
3. Landlord
4. Insurance company
5. All of the above

The correct answer is: E. All of the above
A credit card issuer may check your credit score to determine your creditworthiness - whether or not you'll be able to manage your credit card. A cell phone company may check your score to determine whether or not you need to give any security deposit and which plan you'll be eligible for. When taking a apartment on rent, your landlord may also check your score in order to determine how much deposit you need to give. Insurance companies also check your score to assess your risk level as a potential customer.

5. You checking your credit reports will hurt your score.

1. True
2. False

The correct answer is: B. False
Usually, checking your credit reports will not hurt your score if you take help of consumer services. You are eligible to check many times without affecting your credit report negatively. However, if you ask your creditor/lender to pull your report and show it to you, then it might hurt your score.

6. Which one affects your credit report positively?

1. Consolidation
2. Settlement

The correct answer is: A. Consolidation
While trying to have a good credit record and a good score, you should know that if your financial situation permits, it is better to opt for consolidation in order to solve your debt problems. This is because, in case of consolidation, you repay your existing dues in full whereas, in settlement, you get rid of your debts by paying a certain amount of your outstanding balance. Therefore, in case of consolidation, the status in your credit reports is updated as "Paid in Full"; whereas, in settlement, it is updated as "Paid as Agreed". So, consolidation affects your credit report and score positively.

7. Do you have to take help of a credit repair company to repair your credit record?

1. Yes
2. No

The correct answer is: B. No
There is nothing which a credit repair company can do which you cannot. Yes, it is true that a credit
repair company may be more knowledgeable and they're experienced in these matters. However, you can try to repair your credit record all by yourself. Doing so, you can save the amount which you otherwise would have to pay to the credit repair company as fees. To repair credit by yourself, you need to pull your credit reports and check whether or not there are any errors; if any, dispute it with the credit bureau(s). And, if you want to raise your score, you'll have to manage your credit responsibly and with time, you can enter the range of very good credit score.

8. Your lender or creditor is supposed to pull report from one credit bureau.

1. True
2. False

The correct answer is: B. False
When you apply for a loan, be it a credit card or a mortgage, the lender/creditor checks your credit report and score to judge whether or not you're creditworthy. However, there's a slight difference. When you apply for a mortgage loan, the lender may check your credit rating from the 3 bureaus whereas, to approve a credit card application, a creditor usually accesses one credit report and its associated score.

9. How long does a negative item stay on your credit report?

1. 7 years
2. 3 years
3. 7-10 years, depending on the negative item
4. It entirely depends on the type of the negative item

The correct answer is: C. 7-10 years, depending on the negative item
A negative item usually stays on your credit report for 7 years. However, a Chapter 7 Bankruptcy stays on credit report for 10 years. However, the impact of a negative item, on credit reports, becomes less with time.

10. Amongst these, what is the most important factor to calculate your credit score?

1. Outstanding balance
2. New credit
3. Types of credit
4. Payment history
5. Length of credit history

The correct answer is: D. Payment history
Though the FICO credit-scoring formula is not revealed fully, yet there are certain factors on which your credit score is calculated. Your payment history is perhaps the most important factor since about 35% of your score is based on this criterion. Likewise, outstanding balance constitutes 30%, types of credit and new credit constitutes 10% each and length of your credit history constitutes 15% of your credit score.

So, how many points you've earned? Don't worry if your score is not as per your expectations. Even if you have not scored high in this quiz, now you know the answers to all the questions. This knowledge will help you manage your finances well and monitor your credit reports so that you can achieve or maintain a good credit score. This in turn, will help you enjoy a good lifestyle.