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Grade 9-12
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Lesson

Credit Reports and Credit Scores

Updated: April 23 2017,
Author: Carrie Hixon

Using a Better Money Habits video, this lesson explains the differences between credit reports and credit scores.

Introduction

Using the Better Money Habits video What’s the Difference Between a Credit Report and a Credit Score? , this lesson explains the differences between credit reports and credit scores. It is designed to be used as either an introduction to, or a review of, Lesson 13: Applying for Credit in Financial Fitness for Life, Grades 9-12 .  It includes basic information on credit scores, the three credit reporting agencies, and the importance of monitoring your credit history.  The video is about 3 minutes, and this activity takes one 45 minute class period to complete.

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 credit scores and credit reports.
  • Identity the three credit reporting agencies.
  • List the five components of a credit score.
  • Compute the debt to credit ratio.

Process

  1. Tell students to imagine they are applying for a job or a scholarship at the local university. Ask them to name some of the qualities potential employers or scholarship committees would use to evaluate them. Put the list on the board and discuss the answers, asking students to explain why they are important to consider.
  2. Tell students to imagine they are applying for a loan to buy a car or for a college education. Ask them to name some of the qualities potential lenders would use to evaluate them as a borrower. Put that list on the board and compare it with the list in Procedure 1. Encourage students to discuss the importance of having good character, whether applying for a loan or applying for a job or scholarship. Remind them that people use various ways to determine what type of person we are, and many of those decisions are made by people who do not know us personally.
  3. Use this discussion to introduce the video. Tell them this video will help explain credit scores and credit reports, two important parts of their credit history. Distribute copies of Handout 7.1 for students to complete while watching the video.
  4. Show the video. After watching the video, review the student answers to Handout 7.1 and answer any questions students may have. (Note: You may want to collect Handout 7.1 or allow them to use it as a guide to answer questions on Handout 7.2.)
  5. Put students in small groups. Distribute copies of Handout 7.2. Tell students they are going to discuss what they learned in the video by answering the questions on Handout 7.2.
  6. After they have completed Handout 7.2, have each group prepare a poster with information about credit scores and credit reports to hang up in the classroom.

Conclusion

To summarize this lesson, review the information included on their posters and discuss any additional questions they have about the importance of a good credit history.

Extension Activity

Refer to Lesson 13: Applying for Credit in Financial Fitness for Life, Grades 9-12 .

View additional videos from Better Money Habits, including What Really Goes into Your Credit Score? ; What Is a “Good” Credit Score? , and How Credit Scores Affect Interest Rates .

Distribute copies of the Better Money Habits poster Your Credit Score: How It’s Calculated for students to use with this lesson.

Assessment

Refer to Procedure 6, with the poster activity serving as the assessment.

Subjects:
Personal Finance