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Grade 9-12
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Lesson

Building Good Credit Scores

Updated: January 8 2016,
Author: Carrie Hixon

This lesson uses the Better Money Habit video Does Carrying a Balance on Your Credit Card Hurt Your Credit Score? to help students understand how revolving accounts, such as credit cards, can impact credit scores.

Introduction

This lesson uses the Better Money Habit video Does Carrying a Balance on Your Credit Card Hurt Your Credit Score? to help students understand how revolving accounts, such as credit cards, can impact credit scores. The lesson explains the differences between revolving and installment accounts, and discusses the importance of having a balance of both types of credit to build a good credit score.  The lesson is designed to be used as an extension to Lesson 11 and/or Lesson 13 in Financial Fitness for Life, Grades 9-12 because the two lessons, combined, focus on different types of loans and various elements of a credit score. 

It is recommended that the video be shown after using both lessons to ensure students have a more complete understanding of revolving credit as well as credit reports.  This video is 2:12 in length, and this activity can be completed in 10 minutes.

Financial Fitness for Life  is a comprehensive personal finance curriculum for K-12 students that teaches students how to make thoughtful, well-informed decisions about important aspects of personal finance, such as earning income, spending, saving, borrowing, investing, and managing money. Visit CEE’s Financial Fitness for Life website  for more information on the publication and how to purchase it.

Learning Objectives

  • Explain the differences between revolving accounts and installment accounts.
  • Give an example of revolving accounts and installment accounts.
  • Identify two ways revolving debt can have a negative impact on credit scores.
     

Process

  1. Provide each student a copy of Handout 6.1 to use as guided notes while watching the video.
  2. Introduce students to the video by reminding them that their balance and number of credit cards influence their ability to build a healthy credit score; this video will help them avoid some of the potential pitfalls of using credit.
  3. Show the video and have students complete Handout 6.1 while watching the video.
  4. Debrief the video by discussing their answers to Handout 6.1.

Conclusion

To summarize this lesson, discuss the basic definition of revolving credit and the importance of maintaining a good credit score. 

Extension Activity

Watch the Better Money Habits video The True Cost of Paying Only the Minimum Payment on Your Credit Card (5:13 minutes) where students are shown on a spreadsheet how paying just a few extra dollars per month can make a big difference in how much they will spend on credit over time.  This video provides greater in-depth information about making minimum payments on credit cards.
 

Assessment

Provide each student with a note card.  Have them use it as an “exit ticket” before leaving class by writing either a sentence, bullet points, or paragraph giving two ways that revolving credit can hurt their credit score.

Subjects:
Personal Finance