Using two Better Money Habits videos, this lesson increases student understanding of the importance of building and maintaining good credit.
Using two videos from Better Money Habits , this lesson increases student understanding of the importance of building and maintaining good credit. The two videos – How to Build Credit from Scratch? (4 minutes) and How Much Impact Do Negative Marks Have on Your Credit Score? (3 minutes), are used to supplement Lesson 16: Establishing Credit in Financial Fitness for Life, Grades 6-8, and they help explain the basic principles associated with building and establishing a good credit history.
Through this lesson and supplements, students will be introduced to several important consumer credit concepts, including assessing an applicant’s creditworthiness, examining the role of credit scores when applying for credit, reviewing the importance of building a good credit history, and discovering the rights and responsibilities of borrowing money.
To successfully integrate the videos into Lesson 16, it is recommended that teachers follow the procedures outlined in this supplementary lesson rather than following the procedures given in Financial Fitness for Life . The total time for teaching this lesson, as integrated with Lesson 16, is two 45 minute class periods.
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.
- Explain how credit history is used to determine creditworthiness.
- Explain borrowers’ rights when obtaining credit.
- Explain borrowers’ responsibilities for managing credit.
- Describe steps a person can take to establish credit.
- Identify and define the three “Cs” of credit.
- Copies of student handouts and teacher procedures from Lesson 16: Establishing Credit in Financial Fitness for Life, Grades 6-8 Student Workbook
- Follow Procedures 1 and 2 in Lesson 16: Establishing Credit in Financial Fitness for Life, Grades 6-8.
- Show video Better Money Habits: How Do I Build Credit from Scratch? Ask students to identify how the video relates to the three "Cs" of credit.
- Follow Procedures 3 in Lesson 16 in its entirety.
- Introduce the video How Much Impact Do Negative Marks Have on Your Credit Score? by telling students that having a bad credit history leads to a bad credit score, which has a negative effect on their ability to get credit in the future.
- Show the video.
- Follow Procedures 4, 5, and 6 to complete the lesson.
Have students watch the video Better Money Habits: What’s the Difference between a Credit Report and a Credit Score? . Discuss the differences presented in the video and have students prepare a written summary of the video.
Place students in groups and give each group copies of the posters. Tell them to read through the posters and use the information to assign a credit score based on the loan application included in Lesson 16: Establishing Credit in Financial Fitness for Life, Grades 6-8. Exercise 16.1 C and D. Have students present their findings to the class and support their answers. Materials required: Copies of Better Money Habits Poster: “How to Boost Your Credit Score” and Better Money Habits Poster: “Your Credit Score: How It’s Calculated?”