• Credit Karma website (www.creditkarma.com)
• Fair Isaac website (www.myfico.com)
Go to the Fair Isaac Co. website, www.myfico.com. Do not buy a credit score unless you choose to do so. For this activity, go to “Learn about scores”. Review this page, and follow the link to “What’s in your score”. From this page, follow the links to learn more about credit scores.
Note: You do not have to share your personal credit score or other details in this worksheet.
Using what you have learned about credits scores and the Five C’s, respond to the following in 50-to 100-words each:
1. Your household cash flow helps to determine which C? Describe this C.
Your household cash flow is part of your Capacity from the 5 C’s. Your capacity helps determine your ability to take on more debt and if you are capable to repay it on time. Your capacity is determined by your current debt ratio, payment history, and other sources of repayment that could be used to repay a loan, such as personal assets and money in bank accounts.
2. When are the five C’s important?
The five C’s are always important, but are more important when an individual wants to make a purchase on credit. Each of the 5 C’s plays a role in determining the ability of an individual or business to take on more credit, to repay a loan, and their ability to make the payments on time. The 5 C’s are how a lender determines if the individual is a safe credit risk.
3. Why is a credit score important?
A credit score is important because it is a determined measure of an individual or business’s credit worthiness. It is vital in the ability to borrow money on credit, but also can play a role elsewhere. A credit score can determine whether or not an individual will gain a certain employment opportunity. Credit score can also can determine an individual’s insurance rates....