How Much Do You Know About Credit?

How Much Do You Know About Credit?

February 25, 2021

In 2020, the average FICO score in the U.S. rose to 711, an eight-point increase from 2019.1 When it comes to having healthy credit, your score is the result of many factors. But what specifically goes into someone's credit report, and what steps can you take to improve your credit?1 Test your credit knowledge with our quiz below.

Question 1: If you have three credit cards with a total credit limit of $50,000, what's the maximum balance you can carry before it begins to negatively impact your credit?

  1. $25,000
  2. $7,500
  3. $2,500
  4. $50,000

Question 2: True or false: Carrying a balance on a credit card is one good way to improve your credit score.

  1. True
  2. False

Question 3: If your credit score is currently 720 and you file for bankruptcy, what will your new score be?

  1. 650
  2. 520
  3. 580
  4. 450

Question 4: True or false: Employers aren't allowed to consider your credit history when deciding whether to offer you a job.

  1. True
  2. False

Question 5: What can a credit score over 720 help you do?

  1. Qualify for lower mortgage and auto loan interest rates
  2. Pay less for auto insurance
  3. Avoid security deposits on utilities
  4. All of the above

As you can see, having good credit doesn't just affect your interest rates—it can have a positive impact in many other facets of your life. But if your credit score is lower than you'd like, don't despair—there are some concrete steps you can take to improve and maintain it. From paying down old balances to correcting any incorrect entries on your credit report, you have more power over your credit score than you likely realize.


  1. 3. Generally, the credit reporting agencies like to see a total credit utilization rate of 30 percent or less among all your accounts; however, any utilization rate above about 5 percent can have a negative impact on your credit.2

  2. False. Although carrying a credit card balance doesn't necessarily hurt your credit score as long as your total utilization rate is under 30 percent, it's not necessary to carry a balance (or pay interest) in order to improve your credit.2

  3. 2. Although credit score formulas are proprietary and it's hard to put an exact number on a bankruptcy's impact on any particular person, most people whose credit scores are 700 or above will sustain about a 200-point drop after filing for bankruptcy.3

  4. False. Although employers may not check your credit score, they can access your credit report to see whether there are any red flags that could potentially indicate an increased risk of fraud or disorganization.4 

  5. 4. Not only can a high credit score reduce your interest rates, but it can also provide you with more negotiating power in loan agreements, improve your odds of being approved for an apartment or rental home, and lower your auto insurance rates.5

Important Information

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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