Why Credit Matters
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.
1. Dose you credit score go up or down? –Your credit score will go down
2. Why does it go up or down? - Your credit score will go down because it shows that you can’t make payments when they are due.
3. If your score goes down, how can you fix it? – You can fix your credit score by making payments on time and by using your credit.
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.
1. Does your credit score go up or down? – Your credit score will go up
2. Why does it go up or down? - Your credit score will go up because it shows your responsible with your money and you pay everything on time.
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.
1. Does your credit score go up or down? - Your credit score will go up.
2. Why does it go up or down? – It will go up because you’re paying in full and before the dead line.
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.
1. Does your credit score go up or down? – It will go down.
2. Why does it go up or down? – Your score will go down because it shows that you rely on your credit and it may take longer to pay off the amount you used.
3. If your score goes down, how can you fix it? – You can fix this buy only using a little bit of the money only about 20% max then that shows you don’t rely on your credit.
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.
1. Does your credit score go up or down? - Your credit will go down.
2. Why does it go up or down? – It will go down because it shows that you rely on credit.
3. If your score goes down, how can you fix it? – Try to only get credit for the things you need.
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.
1. Dose you credit score go up or down? –Your credit score will go down
2. Why does it go up or down? - Your credit score will go down because it shows that you can’t make payments when they are due.
3. If your score goes down, how can you fix it? – You can fix your credit score by making payments on time and by using your credit.
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.
1. Does your credit score go up or down? – Your credit score will go up
2. Why does it go up or down? - Your credit score will go up because it shows your responsible with your money and you pay everything on time.
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.
1. Does your credit score go up or down? - Your credit score will go up.
2. Why does it go up or down? – It will go up because you’re paying in full and before the dead line.
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.
1. Does your credit score go up or down? – It will go down.
2. Why does it go up or down? – Your score will go down because it shows that you rely on your credit and it may take longer to pay off the amount you used.
3. If your score goes down, how can you fix it? – You can fix this buy only using a little bit of the money only about 20% max then that shows you don’t rely on your credit.
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.
1. Does your credit score go up or down? - Your credit will go down.
2. Why does it go up or down? – It will go down because it shows that you rely on credit.
3. If your score goes down, how can you fix it? – Try to only get credit for the things you need.