Using Credit Wisely | Pathway in Schools (2024)

Using Credit Wisely | Pathway in Schools (1)

Educators
High School

Unit 1
Unit 2
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Unit 4
Unit 5
Unit 6
Unit 7
Unit 8

Credit cards can be an essential tool for borrowing money and managing debt. Introduce your students to using credit cards, understanding credit scores, and managing debt.

Educator Guide: Unit 6

Interactive Student Capture Sheets: Unit 6

Google Slide Presentation
Power Point Presentation

Family Connection

Using Credit Wisely | Pathway in Schools (2)

Helping Children Build Credit: What You Can Do

10-minute read, plus discussion

There are steps families can take to help their teens build credit. This guide will help families discuss credit use, credit scores, and credit reports with their teens.

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Topic 1

Understanding Credit

Prepare your students to handle credit card offers. Use these resources to explain what credit is, how it can impact them, and how to use credit effectively.

Self-paced Module

Using Credit Wisely | Pathway in Schools (3)

Understanding Credit

10 to 15 minutes (plus optional discussion)

In this module, students are introduced to the definition of credit along with analyzing the similarities and differences of the three different types of credit people can use - installment credit, revolving credit, and service credit. Throughout the various scenarios explored in the module, students are encouraged to understand the terms of any credit they choose to use in the future.

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Classroom Activity

Using Credit Wisely | Pathway in Schools (4)

When to Use or Not Use Credit

1 to 2 Class Sessions

Should people use credit? Students consider a variety of issues that show some topics may not have a clear right or wrong answer. In groups, students discuss debt and the use of credit.

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Supplemental Resource Links

Types of Credit

Next Gen Personal Finance (NGPF)

This complete unit plan includes lessons, activities, projects, and a case study on credit basics, credit cards, and loans. (To access these resources, you will need to register for a free account and verify that you are an educator.)

Credit Basics

University of Arizona's Take Charge Today

This lesson provides an overview of credit including different sources and types of credit. To help students make decisions about using credit, borrowing is explained as spending future income. (To access these resources, you will need to register for a free account and verify that you are an educator. Once logged in, the link above will take you directly to the resource.)

The Amazing $2,000 Pizza

Federal Reserve Bank of St. Louis

Deciding When to Use Credit

Help your students explore the benefits and tradeoffs of using credit including the value of building credit over time, ability to build assets through using credit, and comparing credit offers.

Self-paced Module

Using Credit Wisely | Pathway in Schools (5)

Deciding When to Use Credit

10 to 15 minutes (plus optional discussion)

In this module, your students will consider when to use credit and when to avoid it. They will explore benefits and tradeoffs including building credit over time and building assets through the use of credit (financing higher education and mortgages). They will also learn how to compare credit offers.

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Supplemental Resource Links

Credit Decisions

Council for Economic Education

This four-minute video provides an overview of what loans are, the Five Cs of credit, and what to consider when comparing credit offers.

Easy as Pi

FDIC’s Money Smart for Young People

Explore debt-to-income, debt-to-asset, and debt-to-limit ratios with students and strengthen their abilities to make informed borrowing decisions.

Is There Such a Thing as Good Debt?

PBS Two Cents

Share this video with students to learn about the history of debt and borrowing and spark conversations about the use of credit.

Capacity, Character, Collateral, Capital (Credit)

FDIC’s Money Smart for Young People

This lesson walks students through the process of getting credit, analyzing good and bad credit, strategies for managing credit, and things that can harm one’s credit. By the end, students should be able to demonstrate their understanding of how credit is earned and possess a greater understanding of the consequences of poorly managing one’s credit.

Get Ready to Borrow Money

FDIC’s How Money Smart Are You?

With this tool, students explore the 4 C’s of credit (capacity, capital, character, and collateral) and consider how they apply to themselves.

Are You Ready for Your First Credit Card?

TransUnion

This quiz helps students determine whether or not they are ready for a credit card.

Topic 3

Checking Your Credit Report

What is a credit report and how do you know what is in yours? Help your students explore information found in credit reports and show them how to access their credit reports.

Self-paced Module

Using Credit Wisely | Pathway in Schools (6)

Checking Your Credit Report

10 to 15 minutes (plus optional discussion)

In this module, ways that young people and adults can check their credit are explained. Students learn what information they can expect to find on a credit report, the steps they should take after obtaining a credit report, and how to limit access to their credit using tools such as credit freezes and fraud alerts.

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Supplemental Resource Links

Credit Reports and Scores

University of Arizona's Take Charge Today

Credit Bureaus: The Record Keepers

Federal Reserve Bank of St. Louis

After reading an article on credit bureaus and how they work, students answer a series of discussion questions. A teacher's guide provides additional resources.

AnnualCreditReport.com

Equifax, Experian, and TransUnion

Once students turn 18, they should use this site to request free copies of their credit reports each year. Younger students may preview the site and bookmark it for future use.

How to Use AnnualCreditReport.com

NerdWallet

This site explains how to obtain credit reports using the AnnualCreditReport.com website as well as what to look for in the reports.

Topic 4

Improving Your Credit Score

How are credit scores used, and why is having a good one important? After discussing the loan application process, your students will consider their personal prospects for obtaining credit.

Self-paced Module

Using Credit Wisely | Pathway in Schools (7)

Improving Your Credit Score

10 to 15 minutes (plus optional discussion)

Your students will explore how lenders judge whether someone will be a good borrower, the components of a credit score, and how they can improve their credit score to get favorable loans on houses and cars in the future.

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Classroom Activity

Using Credit Wisely | Pathway in Schools (8)

Who Gets the Loan?

1 to 2 Class Sessions

After discussing what they already know about the loan application process, students consider their personal prospects for obtaining credit. Student “loan officers” evaluate the profiles of five individuals seeking car loans and make recommendations about which should receive loans.

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Supplemental Resource Links

Credit Scores

Federal Trade Commission

This federal government site explains credit scores and how people can work to improve their scores.

Understanding How a FICO Credit Score is Determined

Federal Reserve Bank of St. Louis

This six-minute video explains how credit scores are calculated and what impacts a person's score.

Credit Score Basics

Experian

Students can explore this site for more detailed information on credit scores including credit utilization rates—a concept that confuses many consumers.

Credit Score Video

Council for Economic Education

In this two-minute video, students meet a young entrepreneur who needs to improve his credit to start his business.

Credit Score Estimator

FICO Simulation

Students can use this estimator to see what their credit score might look like now and in the future. Encourage them to enter different responses to the 10 questions and evaluate how they impact the results.

Credit Clash

Next Gen Personal Finance (NGPF)

Challenge students to battle their way to a perfect credit score in this interactive game. While doing so, they’ll learn what causes credit scores to change. There is also a reflection worksheet that can be used to supplement the game.

Topic 5

Managing Debt

Help your students learn how to manage debt and compare strategies for paying down debt.

Self-paced Module

Using Credit Wisely | Pathway in Schools (9)

Managing Debt

10 to 15 minutes (plus optional discussion)

In this module, your students will explore various strategies for paying off debt (lowest balance first vs. highest interest rate first; debt transfer and consolidation), how to avoid scams, and the consequences of poor debt management.

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Classroom Activity

Using Credit Wisely | Pathway in Schools (10)

Snowball or Avalanche?

1 to 2 Class Sessions

After discussing reasons people find themselves in debt, students work in small groups to learn about two popular debt repayment methods: the snowball and avalanche methods. Students explore two scenarios and discuss why individuals might prefer one method over another.

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Unit 5: Paying Yourself First

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Unit 7: Making Major Financial Decisions