lesson how do you establish a positive credit history? protecting your credit 18.2

LESSON

How do you establish a positive credit history?

Protecting Your Credit18.2

ADDITIONAL EXAMPLE 1Credit histories for Pietra and Gracie are given below. One received a credit score of 750 and one received a 425. Match the person with the score.

Pietra: 750Gracie: 425

18.2 LESSON QUIZ

Reeni has applied for a bank loan. Each statement below tells something about her credit history. Decide if each statement is a positive or negative factor and how it might affect the approval of a loan.

Negative; she will possibly make late payments.

1.

pays credit card monthly but often pays latea.

6.14.D

Positive; she fulfilled a loan obligation.

has finished repaying all student loansb.

Reeni has applied for a bank loan. Each statement below tells something about her credit history. Decide if each statement is a positive or negative factor and how it might affect the approval of a loan.

Positive; she has job security.

1.

has been at the same job for 10 yearsc.

Analyze the two credit histories below. Then match the credit scores of 740 and 610 to the histories.

History A: 740

2.

History A: Monthly income: $3,100. Credit card balance: $0. Car loan payment: $240. No late payments.

History B: 610

History B: Monthly income: $2,400. Credit card balance: $0. Car loan payment: $220. Credit card payment: $52. Two late car payments.

Find the debt-to-income ratio for History B.3.

about 11.3%

Which person in Exercise 2 would most likely get a car loan? Explain.

4.

The person with History A. This person has the higher credit score and is considered the lower risk for a loan.

Enlarge the net of the octahedron below. Ask students to fill each triangle with information or characteristics that would give a good credit history and/or a high credit score. Then have them cut out the net and tape it together to form an octahedron. Have them compare their octahedrons with those of other students.

How do you establish a positive credit history?

Sample answer:

Pay all of your bills on time, including loan payments. Do not keep a high credit card or loan balance. Answer all questions on a credit application honestly.