HOW'S YOUR CREDIT?

HOW'S YOUR CREDIT?

Definitions

Credit Report: A record that shows how much you can borrow, how much you owe, and your payment history. FICO Score: A credit score created by the Fair Isaac Corporation ranging from 300 to 850, used by lenders to determine creditworthiness. Credit Bureaus: Agencies such as Equifax, Experian, and TransUnion that collect and maintain individual credit information. Credit Myth: A common misconception about credit, such as the idea that checking your score lowers it, which is untrue.

How long does a missed payment typically stay on your credit report?

1. 5 years
2. 3 years
3. 10 years
4. 7 years

What action can help improve your credit score?

1. Ignoring credit report errors
2. Opening multiple new credit accounts
3. Missing loan payments
4. Reducing credit card balances

Which of the following can negatively impact your credit score?

1. Regularly paying bills on time
2. Maxing out credit cards
3. Keeping credit card balances low
4. Having a diverse mix of credit accounts

Learning Objectives

At the end of the lesson you will understand the process of how credit reporting works. At the end of the lesson you will know the components that determine a FICO score. At the end of the lesson you will learn how to improve and maintain a good credit score. At the end of the lesson you will be able to identify common myths about credit and understand why they are false.

What do you already know about credit reporting and FICO scores?

Credit Reporting Process

Credit card companies and loan servicers report your payments to credit bureaus, which update your credit reports.

Components of a FICO Score

FICO scores range from 300 to 850 and are based on payment history, amounts owed, length of credit history, credit mix, and new credit inquiries.

Improving and Maintaining Credit Score

A good credit score can lead to better loan terms, while a poor one can be costly. To improve your score, report on-time payments, automate your billing, check your credit files.

Common Credit Myths

Understand credit myths, such as the false belief that carrying a balance improves your score.

Write down 3 things you learned in this lesson.

Have students enter three things they learned in this lesson. With this they can indicate their own learning efficiency of this lesson.

Write down 2 things you want to know more about.

Here, students enter two things they would like to know more about. This not only increases involvement, but also gives them more ownership.

Ask 1 question about something you haven't quite understood yet.

The students indicate here (in question form) with which part of the material they still have difficulty. For the teacher, this not only provides insight into the extent to which the students understand/master the material, but also a good starting point for the next lesson.