ECONOMICS (CBSE/UGC NET)

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ECONOMICS

CREDIT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Gail has taken out various types of credit over the last 10 years. She currently has a mortgage and 3 credit cards. She still has the first credit card she signed up for and has paid off a student loan and car loan in the past. All of her payments have been made on time. She does not carry a balance on the credit cards. She owes $125, 000 on her mortgage. What credit score does she likely have?
A
under 500
B
around 700
C
above 750
D
None of the above
Explanation: 

Detailed explanation-1: -Bankruptcies can stay on your report for up to ten years. Even though the credit reporting companies usually won’t report this negative information after the seven year limit, they still may keep your information on file. There are certain instances where they will report it.

Detailed explanation-2: -The three main types of credit are revolving credit, installment, and open credit. Credit enables people to purchase goods or services using borrowed money.

Detailed explanation-3: -Credit cards, buying a car or home, heat, water, phone and other utilities, furniture loans, student loans, and overdraft accounts are examples of credit. In general, credit can be grouped into four broad categories: service, installment, revolving, and open credit (NYC Department of Consumer Affairs, 2013).

Detailed explanation-4: -So, if you demonstrate consistent and timely payments, your credit is likely to improve. You can start by making payments on your student loans, if you have them, even before you graduate.

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