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Credit Reports and Scores Lesson Plan

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					                                                       Lesson Plan
Title of Lesson: Understanding Credit Reports and                        Date: October 20, 2010              Timeframe: 2-50 min. periods
Scores
Author(s): Mary Haugen                                                   School District: St. Mary’s Springs Academy
                                                                         Campus: High School
Subject Area(s): Business Education                                      Grade Level(s)/Course: 10, 11, 12/Personal Finance
State Standards               Wisconsin Personal Financial Literacy Standards:
                                   B.12.2.2 Describe and calculate interest and fees applied to various forms of spending, debt, and saving.
                                   C.12.4.1 Explain how a “credit score” is used.
                                   C.12.4.2 Explain factors that affect creditworthiness and the purpose of credit records.
                                   C.12.4.3 Apply strategies to avoid or correct credit problems.
                                   Wisconsin Business Education Standards:
                                   B.12.1 Access, navigate, and use on-line services.
                                   B.12.12 Analyze spreadsheet data.
                                   B.12.19 Use electronic mail.
                                   C.12.4 Explain the use of credit cards, bank cards, debit cards, credit ratings, and loan applications.
                                   C.12.5 Construct and read charts, tables, and graphs that summarize data from real world situations.
                                   D.12.3 Explain how consumer legislation may affect consumer product prices.
                                   D.12.6 Explain how interest rates are determined by market forces and how they influence the amount of
                                            borrowing and saving by business investors, consumers, and government officials.
                                   I.12.4 Identify laws governing credit and credit reporting.
                                   Wisconsin Information and Technology Literacy Standards:
                                   A.12.3 Use a computer and productivity software to organize and create information.
                                   A.12.4 Use a computer and communications software to access and transmit information.
                                   B.12.3 Locate and access information sources.
                                   D.12.2 Use information, media, and technology in a responsible manner.

Stated Objective(s)                Students will:
                                   Indentify the three credit reporting agencies
                                   Analyze the contents of a credit report
                                   Disseminate the parts of a credit score


Procedures for Lesson              1. Load Credit Scores and Reports PowerPoint presentation (notes, etc.)
                                   2. Ask the Introductory Question—If you borrowed money from a friend, what would she say about your
                                      responsibility in paying her back?
                                               Discuss the responsibilities you have to repay your friend. Would she trust you again?
                                               Discuss how this same scenario dictates your responsibility in paying credit obligations.
                                   3. Proceed with notes about CRAs.
                                   4. Look at the sample credit report.
                                               Ask students what is on a credit report. Write them on the whiteboard.
                                               Ask why things like salary and marital status are not there since they’d be an indication of paying or
                                                not.
                                   5. Have students log on to the computers and access the Citi Bank credit cards site.
                                               Give the students a handout worksheet to answer questions about the credit report at the Citi Bank
                                                cite. (or have students access it from the class wiki)
                                               Discuss the answers so that everyone has them correct. This also will give students an opportunity to
                                                ask if something was unclear (lien, collections, bankruptcy)
                                               Collect the sheet the next class period after the quiz.
                                   6. Payment codes: Review types of credit (open, installment, revolving). Note how they are separated on a credit
                                      report.
                                   7. Discuss how, under the FACT Act, every person can get one free credit report per year from each of the credit
                                      reporting agencies.
                                               The Pirate Hat link goes to the freecreditreport.com commercials.
                                               Have students listen to what is said in the commercial, plus that the voiceover says it is free with
                                                enrollment in Triple Advantage, which costs about $15.00/month.
                                               The point—this is not the right website and can cost money.
                                               Go to annualcreditreport.com link then show how easy it is to get your credit report. Ask, “What
                                                information is necessary to obtain your credit report?” Look at the online and mail procedures to ask
                                                for the report.
                                   8. FICO credit scores.
                                               Hand out the questions that go with the YouTube videos.
                                               Watch the Fair Isaac and What’s My Credit Score… videos. Have students fill in the answers to the
                                                questions.
                                               Look at the FICO score statistics table.
                                               Emphasize the higher scores and ask the students what people have to do to get the higher scores.
                                                Write answers on the whiteboard. Students should have some answers from the videos.
                                               Analyze the pie chart. Students should add information to their notebooks.
                                   9. Who wants to know your credit score?
                                               Discuss why employers, landlords, insurance companies, and cellphone companies need to access
                                                your credit record.
                                   10. Build your credit score.
                                               Stress that once you have a job, you will have a credit score. Build your credit record with small,
                                                wise moves. Make small purchases (i.e.-gasoline) then pay it off IN FULL every month.
                             11.     Budget buster. How much can you afford? The 20/10 rule.
                                         Excluding mortgages, never borrow more than 20 percent of annual net pay. Monthly payments to
                                          credit obligations should not exceed 10 percent of monthly net income.
                             12.    Wrap up. $47,000 Savings.
                                         Compare two people with different FICO scores who presumably borrow the same amount to buy a
                                          car and the same amount to buy a house.
                                         Show how the difference in credit scores will cost over $47,000 more if you have a low credit score
                                          versus someone with a good credit score.
                                         Show that the difference in monthly payments is $140.
                                         Point out both people will have the car and house. One person will have an additional $140 per
                                          month. Have students determine how that money could be spent and what additional “things” the
                                          person with the better credit score will have. (vacation, retirement, education fund, etc.)
                             13.    Announce a quiz for the next day covering credit reports and credit scores.
                             14.    Additional time. May use the FICO score simulator link to look at ways to increase credit scores.


Assessment or Evaluation      Worksheet: Credit Report Worksheet at Citi Cards website
                              Worksheet: Credit Score and Report notes videos
                              Quiz: Credit Report and Score Quiz (next class day)

Enrichment                    Review these websites:
                              Interpreting credit report codes http://www.ehow.com/how_5271146_read-credit-report-codes.html
                              Citi lesson—Credit http://www.citigroup.com/citi/financialeducation/curriculum/images/adult_7_aud.swf

Materials                     Credit Scores and Reports presentation
                              12 copies (or on class wiki): Credit Report Worksheet at Citi Cards website
                              12 copies (or on class wiki): Credit Score and Report notes videos
                              12 copies of Credit Report and Score Quiz

                              Technology Resources:
                              Websites:
                              https://www.citicards.com/cards/wv/html/cm/know-the-rules/your-credit-history/how-to-read-your-credit-
                              report.html (interactive credit report)
                              http://www.money-zine.com/Financial-Planning/Debt-Consolidation/FICO-Credit-Scores/
                              https://www.annualcreditreport.com/cra/index.jsp
                              http://www.youtube.com/watch?v=wRV3OHpHcyo&feature=related (FICO score change)
                              http://www.youtube.com/watch?v=n1utKhlpUG8&feature=channel (How Raise My Credit Score)
                              http://www.youtube.com/watch?v=6shm2JO8msg&feature=related (850 Credit Score?)
                              http://www.youtube.com/watch?v=YzkBhfbwRkg&NR=1 (9 freecreditreport.com commercials)
                              http://www.myfico.com/HelpCenter/FICOScores/ (FICO scores)
                              www.practicalmoneyskills.com Teens Lesson 7
                              Computers: 12 (sign up for computer lab use)
                              Printers: 2
                              Remote presentation slide advancer: 1

                              Other Resources: Whiteboard, markers, eraser




 Credit Scores and    Credit Report      Credit Report and Credit Report and
                                        Score notes videos.doc Score Quiz.doc
 Reports 2007.pptx Worksheet at Citi Cards website.doc

				
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