Exercise 5: Is no credit the same as bad credit?
Which of these people has bad credit?
- A person who just turned 18
- A 22 year old who has never missed a payment on anything
- A 40 year old who has never had a loan or credit card
- Answer: None of the above
- Explanation: Person A and Person C will have no credit, and Person B will have good credit.
True or false: Bad credit is better than no credit.
- Answer: False
Exercise 6: What do credit cards do for credit scores?
What does it take to keep a good credit score with credit cards?
- Answer: Making your monthly payments on time
- Making most of your payments most of the time
- Thinking about making your payments but not actually making them
- Never making your credit card payments
Will credit cards ever hurt your credit score?
- No, just having them makes your credit score go up
- Yes, because they are considered as debt
- Answer: Yes, but only if you miss a payment
- Yes, but only if you have a huge credit card balance
Continue to the next section for the Quick Reference Answer Guide.