Credit History and Ratings
Course Title – Money Matters
Lesson Title – Credit History and Ratings
Performance Objectives: Understand and manage credit responsibly.
Specific Objective :
As a result of this lesson, the student will:
1. Define and know the components of a credit report
2. Understand what credit history is and why it is important
3. Recognize ways to better their credit history and rating
4. Know what to do if they have an inaccurate or fraudulent report
5. Identify Identity Theft, and methods to prevent it.
6. Discuss what is NOT Identity Theft
Time: Instruction time: 60 minutes, which may vary depending on teaching
style. Activities will also affect time needed to complete lesson – depending on
the number and nature of activities chosen.
TEKS Correlations: 130.162.(c)(2)(A),(F); (11)(G)-(I)
Occupational Correlation (O*Net – http://www.onetonline.org/)
13-2052.00 - Personal Financial Advisors
Similar job titles: Financial Advisor, Portfolio Manager, Financial Planner,
Account Executive, Registered Representative, Investment Advisor, Financial
Consultant, Financial Counselor, Analyst, Certified Financial Planner (CFP)
Tasks

Sell financial products such as stocks, bonds, mutual funds, and insurance if
licensed to do so.

Build and maintain client bases, keeping current client plans up-to-date and
recruiting new clients on an ongoing basis.

Analyze financial information obtained from clients to determine strategies for
meeting clients' financial objectives.

Answer clients' questions about the purposes and details of financial plans
and strategies.

Review clients' accounts and plans regularly to determine whether life
changes, economic changes, or financial performance indicate a need for
plan reassessment.

Interview clients to determine their current income, expenses, insurance
coverage, tax status, financial objectives, risk tolerance, or other information
Copyright © Texas Education Agency, 2012. All rights reserved.
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needed to develop a financial plan.

Recommend strategies clients can use to achieve their financial goals and
objectives, including specific recommendations in such areas as cash
management, insurance coverage, and investment planning.

Implement financial planning recommendations or refer clients to someone
who can assist them with plan implementation.

Research and investigate available investment opportunities to determine
whether they fit into financial plans.

Explain and document for clients the types of services that are to be provided,
and the responsibilities to be taken by the personal financial advisor.
Preparation
Materials and Equipment Needed:







“What is in your credit score?” Worksheet (1 per student)
“What is in your credit score?” Teacher Master
“Improving your FICO credit score?” (1 per student)
“Improving your FICO credit score?” Teacher Master
Chalkboard, whiteboard, or smartboard
Computer with projection capabilities and internet access
Computers with internet access for students
Learner Preparation:
•
•
•
To get students to begin thinking about how their actions could affect their
credit rating, explain that their credit rate is what determines if they can get
loans.
Credit Rate – the numerical value calculated from a credit report that is used
by creditors to help determine if you are eligible for credit.
The better your rating, the better your chances of getting a loan. Each person
has their own rating, based on their credit responsibility. The ratings range
from 300-850.
Accommodations for Learning Differences:
ESL: Financial Literacy Lessons for ESL Students
http://ida.neighborhoodpartnerships.org/assets/files/Financial_Literacy%20_Less
ons_for_ESL_Students.pdf
Activity/Outline:
Give each group of 2-3 the “What is in your credit score?” handout. Have each
group complete the worksheet. Discuss the correct answers with your students,
and give them examples of each item on the handout. Work through Presentation
– specifically review Slide #7 – and reiterate that a credit report contains
information that determines your credit score based on your finances. Credit
report and credit history can be used interchangeably. Continue through
Presentation and discuss the terms. Have students make notes of the meaning
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of each term.
View the “Credit History and Ratings” video from the hyperlink on
slide #19.
Have students each complete the “Improving your FICO credit score”
internet search guide.
Summary
Review:
 Review the four objectives, and information from each as identified
on the Presentation.
Evaluation
Informal Assessment:
Observe students as they participate in the group activity “What is in your credit
score?”, and the internet search activity, “Improving your FICO credit score.”
Take up their papers and review for completion and participation as well as how
focused their answers are to the questions and topics addressed.
Formal Assessment:
Quiz on Credit History
Extension/Enrichment:
Assign the “Credit History and Score Assignment” to students for input from
adults that will discuss their credit knowledge.
Additional Resources:
Websites:
" High School Program." National Endowment for Financial Education - Home.
N.p., n.d. Web. 6 Jan. 2012.
<http://www.nefe.org/HighSchoolProgram/tabid/146/Default.aspx>.
The Jump$tart Coalition for Personal Financial Literacy. (2010). 2008
JUMP$TART HIGH SCHOOL SENIOR QUESTIONNAIRE

Adapted from "FFA Learn." Financial Planning and Management. N.p., n.d.
Web. 17 Jan. 2012. <https://www.ffa.org/FFAResources/ffalea
Introduction
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Introduction (LSI Quadrant I):
SHOW: Show students a group of mock credit cards, bank loans, and pictures of
items (cars, houses, etc.) that loans are commonly used to purchase.
ASK: Ask students how credit card companies, banks, and mortgage companies
determine who would be a good candidate to loan money to for the purchase,
and who would not.
SAY: When a credit card company, bank or mortgage company loans money,
they have to first determine if the person that has asked for the loan will pay it
back.
ASK: Ask students if they would loan money to someone if that person had
borrowed money in the past from you or someone else but had not paid it back.
SAY: Credit scores are determined in much the same way.
ASK: Ask students to describe what information they would need in order to
determine if the person that has requested the loan would be a good person to
loan money to.
Outline
Outline (LSI Quadrant II):
Instructors can use the Presentation presentation, slides, handouts, and note
pages in conjunction with the following outline.
MI
I.
A.
B.
C.
D.
Outline
Identify for the students what the objectives of the unit
are:
Define and know the parts of a credit report.
Understand what credit history is and why it is
important.
Be aware of ways to improve credit history and rating.
Know how to act if a credit report is fraudulent or not
accurate
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Notes to Instructor
Use the Presentation as
an aid. Work through
each slide as you identify
and discuss the Key
Terms for the lesson:







Credit
Credit History
Credit Rate
Credit Report
Equifax
Experian
FICO
II.
Credit History – record of your personal financial
transactions. Used interchangeably with credit report.
Use Presentation as aid.
Ask students these
questions and have them
raise their hands if they:
*Have a checking
account and/or a savings
account;
*Have a telephone or
other utilities billed in
their own name;
*Have a bank credit
card;
*Have a small short term
cash loan;
*Paid off any loans
Explain that any of these
that they raised their
hand on are some of the
first steps to establishing
a credit history.
Continue to advance
through terms slides to
the Credit Report slide.
III. Credit Report – contains all of the information
regarding your finances, such as payment history and
amounts owed.
Use Presentation as aid
*Explain to students that
they should check their
credit report closely for
accuracy when they
receive the free reports
they are allowed each
year.
*Ask students what they
know about identity
theft, and how it could
affect them if it
happened to them.
*Hint that a discussion
about identity theft will
follow in this lesson.
*Continue through
Presentation through Key
Terms slides.
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Use Presentation as aid
IV. Credit Score
*Group students into
groups of 2-3.
*Give each group a copy
of the “What is in your
credit score” handout.
*Display the slide
regarding the credit
report term.
*Reiterate that a credit
report contains all the
information related to
your finances.
Verbal
Linguistic
V. Credit History & Ratings
View video via hyperlink
on Slide 19 “The Big
Date”
VI. Identity Theft – One person, using information
gathered from some source, takes on the identity of
another person without permission and conducts a
variety of activities using that identity.
A. Prevent Identity Theft:
i. Check your credit report
ii. Guard your social security number
iii. Pick passwords carefully
iv. Be careful what you throw away
v. Shred important information
The intent is to use the
identity for personal
gain, generally with the
intent to defraud others.
VII. What is NOT Identity Theft?
A. Someone using your credit card with your
knowledge and permission
B. Someone properly exercising a legally granted
power of attorney on your behalf;
C. Someone making up a fake name and signing into a
hotel – (this may be a crime, but it is NOT identity
theft.)
Ask students what is
NOT considered identity
theft.
Logical
Mathematical
Visual
Spatial
Musical
Rhythmic
Bodily
Kinesthetic
Intrapersonal
*Ask students how they
can prevent identity
theft, and ask how they
can make sure they are
not a victim. Put the list
on the whiteboard or
other resource/equipment
available.
Interpersonal
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Identify scenarios and
ask students to decide if
the scenario does or does
not describe identity
theft.
Naturalist
Existentialist
Guided Practice (LSI Quadrant III):
“What is in your credit score?” (group activity)
Independent Practice (LSI Quadrant III):
“Improving your FICO credit score.” Questionnaire/practice
Summary
Review (LSI Quadrant I & IV): Go over students’ responses to the “Improving
your FICO credit score” questionnaire.
Evaluation
Informal Assessment (LS1 Quadrant III): Instructor should observe the work ethic
of individuals involved in class discussions and the independent practice activity.
Formal Assessment (LSI Quadrant III, IV): Students will be evaluated via the Quiz
on Credit History and Ratings.
Extension
Extension/Enrichment (LSI Quadrant IV): Give one copy of the “Credit History
and Score Assignment” to each student. Have them interview an adult that is
willing to share some credit knowledge with them, and complete the
questionnaire.
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What is in your credit score?
Place each of the following components of a credit score next to a section of the
pie chart that resembles how much it makes up your credit score.
Payment History
Length of Credit History
Types of Credit Used
Amounts Owed
New Credit
10%
10%
35%
15%
30%
Source: Garman, E.T., & Forgue, R. (2007). Personal Finance (9th ed.). SouthWestern College.
Copyright © Texas Education Agency, 2012. All rights reserved.
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What is in your credit score?
Place each of the following components of a credit score next to a
section of the pie chart that resembles how much it makes up your
credit score.
Payment History
Types of Credit Used
New Credit
Length of Credit History
Amounts Owed
10% = Types of
Credit Used
10% = New Credit
35% = Payment
History
15% = Length of
Credit History
30% = Amounts
Owed
Source: Garman, E.T., & Forgue, R. (2007). Personal Finance (9th ed.). SouthWestern College.
Copyright © Texas Education Agency, 2012. All rights reserved.
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Name: __________________________Date: _______________Period: _____
Improving your FICO credit score
Using a website to improve your FICO score, complete the following questions:
1. It is important to know that improving a credit score takes ____________ and
there is no ___________ _______________. (Fair Isaac Corporation, 2010).
2. The best solution to improving a credit score is to manage credit
_______________________ over ________________. (Fair Isaac
Corporation, 2010).
3. What kind of impact would a delinquent payment have on a credit score?
_________________________. (Fair Isaac Corporation, 2010).
4. How long does a collection account stay on your report?
___________________. (Fair Isaac Corporation, 2010).
5. Susan and John just got credit cards with limits of $2,500 to use on their SAE
pork production projects. Susan has used all the extra money that she doesn’t
need for her pork production on stuff that she wanted from the mall, her
current balance is $2,300 that she owes. John has used his credit card only
for feed and medicine expenses and his debt is only $650. Since neither
Susan nor John has maxed out their credit cards, will this affect each of their
credit scores the same?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_______________________________________.
6. Phil owes $3,000 on a credit card. He decides to take out another credit card
to pay off the first one. Is this a good or bad strategy? Why or Why Not?
______________________________________________________________
______________________________________________________________
______________________________________________________________
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7. Fran decides she wants to build up some credit so she can eventually get a
large enough loan for a house. She has never had a credit card before and
needs advice on what to do. She has heard that the more credit cards she
has, the better her credit will be. What advice can you give her?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_________________________________________________
8. Which one of these items will help raise your credit score? (Fair Isaac
Corporation, 2010)
a.
Opening new accounts responsibly and paying them off
b.
Pay down your revolving credit
c.
Always pay your bills on time
d.
All of the above
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TEACHER KEY
Improving your FICO credit score
Using a website to improve your FICO score, complete the following questions:
1. It is important to know that improving a credit score takes ___time______
and there is no _quick______ ___fix________. (Fair Isaac Corporation,
2010).
2. The best solution to improving a credit score is to manage credit
__responsibly____________ over ___time________. (Fair Isaac
Corporation, 2010).
3. What kind of impact would a delinquent payment have on a credit score?
____Negative_______________. (Fair Isaac Corporation, 2010).
4. How long does a collection account stay on your report? __Seven
years___________. (Fair Isaac Corporation, 2010).
5. Susan and John just got credit cards with limits of $2,500 to use on their
SAE pork production projects. Susan has used all the extra money that
she doesn’t need for her pork production on stuff that she wanted from the
mall, her current balance is $2,300 that she owes. John has used his
credit card only for feed and medicine expenses and his debt is only $650.
Since neither Susan nor John has maxed out their credit cards, will this
affect each of their credit scores the same?
A higher outstanding debt will affect a credit score negatively more so than
a lower debt. Susan’s credit score will most likely be lower than Johns.
6. Phil owes $3,000 on a credit card. He decides to take out another credit
card to pay off the first one. Is this a good or bad strategy? Why or Why
Not?
Opening new credit cards could actually lower your credit score. The paid
off credit card will still show up on Phil’s report for seven years. The most
effective way for Phil to improve his score would be to pay off his debt as
soon as possible.
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7. Fran decides she wants to build up some credit so she can eventually get
a large enough loan for a house. She has never had a credit card before
and needs advice on what to do. She has heard that the more credit cards
she has, the better her credit will be. What advice can you give her?
Taking out many new credit cards will actually lower her credit score. She
should start by just taking out one credit card, and managing it
responsibly. She should only take out multiple credit cards it’s absolutely
necessary for larger purchases if she knows she can pay them off without
late payments.
8. Which one of these items will help raise your credit score? (Fair Isaac
Corporation, 2010)
a. Opening new accounts responsibly and paying them off
b. Pay down your revolving credit
c. Always pay your bills on time
d. All of the above
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Name: ______________________Date: _______________Period: _____
Credit History and Score Assignment
Interview an adult that you know is willing to share some credit knowledge with
you. Ask them the following questions.
1. When did you get your first credit card? _____________________________
2. Have you every obtained your credit report? ___________
a.
Have you obtained your credit score? ____________
3. What types of information appear on your credit report?
______________________________________________________________
4. What actions can you take to improve or maintain your credit score?
______________________________________________________________
______________________________________________________________
5. What actions do you take to prevent against identity fraud?
______________________________________________________________
______________________________________________________________
Answer the following questions on your own, based on what you learned in class.
1. What makes up the largest part of your credit report?
______________________________________________________________
2. What is the company in charge of the calculations to determine credit scores?
______________________________________________________________
3. Give three ways to start establishing credit history.
______________________________________________________________
______________________________________________________________
______________________________________________________________
4. List three things that could hurt or decrease your credit score.
______________________________________________________________
______________________________________________________________
______________________________________________________________
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TEACHER KEY
Credit History and Score Assignment
Interview an adult that you know is willing to share some credit knowledge with
you. Ask them the following questions. Answers will vary for questions 1-5.
1. When did you get your first credit card?
_____________________________
2. Have you every obtained your credit report? ___________
a. Have you obtained your credit score? ____________
3. What types of information appear on your credit report? _Examples: loans,
mortgages, utilities, credit cards, etc._
4. What actions can you take to improve or maintain your credit score?
Examples: pay bills on time, keep credit card balances low, pay off debt,
manage credit cards responsibly.
5. What actions do you take to prevent against identity fraud?
Examples: keep important information in a safe place, guard SS number,
create difficult passwords for online banking, pick PIN numbers wisely,
and don’t put SS number on driver’s license.
6. What makes up the largest part of your credit report? Payment History
7. What is the company in charge of the calculations to determine credit
scores? _FICO –Fair Isaac Corporation.
8. Give three ways to start establishing credit history.
1.
2.
3.
4.
5.
Have a checking account and a savings account
Have a telephone or other utilities billed in their own name.
Have a bank credit card.
Have a small short term cash loan
Paid off any loans.
9. List three things that could hurt or decrease your credit score.
Examples: Late payments, high balances on credit cards,
opening/applying for many new credit cards.
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Name: _______________________Date: _________Period: _____
Quiz - Credit History and Ratings
Part 1. Multiple Choice – Identify the correct response to each of the
following statements. Write the letter corresponding to the correct answer
in the space provided to the left of each item.
_____1. Which of the following statements best describes your right to check
your credit history for accuracy?
a. Your credit record can be checked once a year for free.
b. You cannot see your credit record.
c. All credit records are the property of the U.S. Government and
access is only available to the FBI and Lenders.
d. You can only check your record for free if you are turned down for
credit based on a credit report.
_____2. Which of the following can impact your credit rating?
a. Borrowing money from a friend to pay for lunch.
b. Living with your parents until you earn enough money to afford to rent
an apartment
c. Paying cash for a used car
d. Making a late car loan payment
_____3. Which of the following agencies provide free credit reports for
consumers?
a. Equifax, credit unions
b. Credit unions, your bank
c. Experian, Credit Reports Association
d. TransUnion, Experian
e. None of the above, you must pay a fee for any credit report
_____4. Suki wants to move into her own apartment after graduating from high
school, but she is worried that she won’t be able to rent an apartment
without significant credit history. What can Suki do to start using credit
wisely?
a. Rent an apartment with a friend who will sign the lease
b. Apply for a store credit card
c. Apply for several major credit cards
d. Close her checking account to avoid bouncing a check
____5. Credit experts recommend that you check the status of your credit reports
at least…
a. Every time you apply for a loan or credit card.
b. When you apply for your first loan or credit card.
c. Once a year.
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d. Once every five years.
Part 2. Matching and Short Answer. Match each situation described below
with whether it is an appropriate or inappropriate use of credit by placing a
check in the correct column. In the right column, write at least one
sentence to justify your answer.
Situation
Appropriate Inappropriate
(X)
(X)
6. 1 – year loan to
buy a mountain
bike
7. Borrow $5,000
to pay for a
wedding reception
8. Use store credit
to buy a new
refrigerator to
replace one that
no longer is
working properly
9. 5-year loan for
used car
10. Set up a 6month payment
plan to pay
hospital fees for
X-rays from an
accident
KEY
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Reason
Quiz over Credit History and Ratings
1. A
2. D
3. D
4. B
5. C
6-10. Answers will vary
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