Question

1. research ways to improve one’s credit. create a list of things one can do to improve their credit. create a list of what could happen if one has a bad credit rating.

what can i do?

what might happen if i have bad credit? (3)

(questions on the back)

Explanation:

What can I do? (to improve credit)

• Pay bills on time: Consistently paying credit card bills, loans, and utility bills by their due dates helps build a positive payment history, which is a major factor in credit scoring.
• Reduce credit utilization: Keep the amount of credit used (e.g., on credit cards) below 30% of the available credit limit. For example, if a credit card has a $1,000 limit, try to owe less than $300 at any time.
• Check credit reports regularly: Review credit reports from major bureaus (Equifax, Experian, TransUnion) for errors. Dispute any incorrect information (like unauthorized accounts or wrong payment statuses) to ensure an accurate credit profile.
• Diversify credit types: Having a mix of credit (e.g., credit cards, installment loans like auto or student loans) can show responsible handling of different credit forms, though this is a smaller factor.
• Avoid opening too many new accounts: Frequent new credit applications can lower the average age of credit accounts and trigger hard inquiries, which slightly hurt credit scores.

What might happen if I have bad credit? (3 examples)

• Difficulty getting loans/credit: Lenders (for mortgages, car loans, or new credit cards) may deny applications or offer loans with very high interest rates, as they see bad credit as a sign of higher default risk.
• Higher insurance premiums: Insurance companies (for auto, home, etc.) may charge more, as studies show people with bad credit are more likely to file claims.
• Rental challenges: Landlords often check credit; a bad score can lead to rejection of rental applications or require a larger security deposit.

Answer:

What can I do? (to improve credit)

• Pay bills on time (e.g., credit cards, loans, utilities).
• Keep credit utilization below 30% of available limits.
• Regularly check and dispute errors on credit reports.
• Diversify credit types (e.g., credit cards + installment loans).
• Avoid excessive new credit applications.

What might happen if I have bad credit? (3)

• Lenders may deny loans/credit or offer high - interest rates.
• Insurance companies may charge higher premiums.
• Landlords may reject rental applications or require larger security deposits.