5/23 FA 8.6 Why your Credit Score Matters

Last updated over 2 years ago

28 questions

Note from the author:

OBJECTIVES & STANDARDS
Math Objectives
Analyze data presented in a relative frequency histogram
Common Core Math Standards
Link to all CCSS Math
CCSS.HSS.ID.A.1
Personal Finance Objectives
Understand why interested parties may want to check your credit score
Assess the impact of a high or low credit score on interest rates and loan outcomes
List ways to boost a low credit score or begin to gain a credit history if you have no score
National Standards for Personal Financial Education
Managing Credit
1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees
7b: Assess the value to a potential lender of the information contained in a credit report
8b: Explain how a borrower’s credit score can impact their cost of credit and their ability to get credit
8c: Recommend ways that a person can increase their credit score
9a: Explain how landlords, potential employers, and insurance companies use credit reports and credit scores in decision making
9b: Provide examples of benefits associated with having a good credit score

Instructions

OBJECTIVES & STANDARDS
Math Objectives
Analyze data presented in a relative frequency histogram
Common Core Math Standards
Link to all CCSS Math
CCSS.HSS.ID.A.1
Personal Finance Objectives
Understand why interested parties may want to check your credit score
Assess the impact of a high or low credit score on interest rates and loan outcomes
List ways to boost a low credit score or begin to gain a credit history if you have no score
National Standards for Personal Financial Education
Managing Credit
1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees
7b: Assess the value to a potential lender of the information contained in a credit report
8b: Explain how a borrower’s credit score can impact their cost of credit and their ability to get credit
8c: Recommend ways that a person can increase their credit score
9a: Explain how landlords, potential employers, and insurance companies use credit reports and credit scores in decision making
9b: Provide examples of benefits associated with having a good credit score

Intro

Learn it 1

Practice It

Learn it 2

MATH CONNECTION - RELATIVE FREQUENCY HISTOGRAMS

The End!

5/23 FA 8.6 Why your Credit Score Matters

Last updated over 2 years ago

28 questions

Note from the author:

OBJECTIVES & STANDARDS
Math Objectives
Analyze data presented in a relative frequency histogram
Common Core Math Standards
Link to all CCSS Math
CCSS.HSS.ID.A.1
Personal Finance Objectives
Understand why interested parties may want to check your credit score
Assess the impact of a high or low credit score on interest rates and loan outcomes
List ways to boost a low credit score or begin to gain a credit history if you have no score
National Standards for Personal Financial Education
Managing Credit
1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees
7b: Assess the value to a potential lender of the information contained in a credit report
8b: Explain how a borrower’s credit score can impact their cost of credit and their ability to get credit
8c: Recommend ways that a person can increase their credit score
9a: Explain how landlords, potential employers, and insurance companies use credit reports and credit scores in decision making
9b: Provide examples of benefits associated with having a good credit score

Instructions

OBJECTIVES & STANDARDS
Math Objectives
Analyze data presented in a relative frequency histogram
Common Core Math Standards
Link to all CCSS Math
CCSS.HSS.ID.A.1
Personal Finance Objectives
Understand why interested parties may want to check your credit score
Assess the impact of a high or low credit score on interest rates and loan outcomes
List ways to boost a low credit score or begin to gain a credit history if you have no score
National Standards for Personal Financial Education
Managing Credit
1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees
7b: Assess the value to a potential lender of the information contained in a credit report
8b: Explain how a borrower’s credit score can impact their cost of credit and their ability to get credit
8c: Recommend ways that a person can increase their credit score
9a: Explain how landlords, potential employers, and insurance companies use credit reports and credit scores in decision making
9b: Provide examples of benefits associated with having a good credit score

Intro

QUESTION OF THE DAY: What's the average credit score needed to rent an apartment?
Write your answer to the question below. Then, compare your answer to the answer on the second slide. Finally, follow your teacher’s directions on how to answer the follow-up questions below.

Take a guess: What’s the average credit score needed to rent an apartment?

In a competitive rental market, where demand for apartments exceeds supply, how could a high credit score be toward your advantage?

Learn it 1

INFOGRAPHIC: Why Does Your Credit Score Matter?
What? An apartment lease isn’t a loan or line of credit. Why would apartment owners want to check your credit score before renting to you? Turns out, it’s not just lenders who can ask to see your credit history. Review this infographic and answer the questions.

If they’re not lending you money, what motivation would these other people or businesses have to request your credit score?

Does this seem fair? Why or why not?

Practice It

CALCULATE: Impact of Credit Score on Loans
In the previous lesson, you did an activity to estimate the credit scores of 3 characters with different credit histories. In this follow-up activity, you’ll learn how their credit scores impact the cost of borrowing. Follow your teacher’s directions to complete the activity.

Now, assume that each of the three students has graduated from college, maintained their credit score, secured a $50,000/year job, and now wants to go car shopping. Use the FICO Loan Savings Calculator to determine how much the loan is going to cost Sam, Jessica, and Danielle.
Enter the following information into the calculator:
Type of Loan: 60-month new auto
State: National
Loan Principal Amount: $21,000
Current FICO Score Range: Varies by person
Push Calculate

What is the difference in APR paid by Sam and Jessica?_______ 

Now, let’s see how Sam’s, Jessica’s, and Danielle’s credit scores would impact a mortgage. This time they’re each trying to finance $250,000 of a condo using a 30-year fixed mortgage. Use the FICO Loan Savings Calculator and enter the following information:
Type of Loan: 30-year Fixed
State: National
Loan Principal Amount: $250,000
Current FICO Score Range: Varies by person
Push Calculate

If someone asked you, “Why should I bother worrying about my credit score?” what would you say?

Learn it 2

EDPUZZLE: Boost Your Credit Score
Let’s say you, like the image above, have a credit score of 575. Based on the Question of the Day, you’re more likely to secure an apartment lease if your score is 65 points higher. What can you do? Complete this EdPuzzle or answer the same questions below to find out some options you’ve got.

VIDEO: How to Start Building Credit from Scratch
What if, instead of a low credit score, you’ve got NO credit score? That’s quite common if you’re a teenager without any credit already in your name. Watching this video will help you answer the questions that follow.

In most cases, banks do not report your banking actions to the credit bureaus, yet the video says that having a checking account could help you gain access to credit.

How does the video say a checking account might be helpful?

MATH CONNECTION - RELATIVE FREQUENCY HISTOGRAMS

GRAPH: Comparing FICO Credit Scores
The last two videos might have you thinking it’s pretty difficult to achieve a high credit score, and depending on your personal circumstances, it might be. But, when you look at the overall US population that has a credit score, you find that scores are higher than you might imagine.
The chart shown below is a relative frequency histogram. While the y-axis of many histograms shows the count, or pure number of data points that fit into a given bar’s category, a relative frequency histogram tells you the percent of data that falls into each bar. Review this relative frequency histogram to answer the questions that follow.

The End!

5/23 FA 8.6 Why your Credit Score Matters

OBJECTIVES & STANDARDS

OBJECTIVES & STANDARDS

5/23 FA 8.6 Why your Credit Score Matters

OBJECTIVES & STANDARDS

OBJECTIVES & STANDARDS

QUESTION OF THE DAY: What's the average credit score needed to rent an apartment?

Take a guess: What’s the average credit score needed to rent an apartment?

In a competitive rental market, where demand for apartments exceeds supply, how could a high credit score be toward your advantage?

INFOGRAPHIC: Why Does Your Credit Score Matter?

If they’re not lending you money, what motivation would these other people or businesses have to request your credit score?

Does this seem fair? Why or why not?

If someone asked you, “Why should I bother worrying about my credit score?” what would you say?

EDPUZZLE: Boost Your Credit Score

VIDEO: How to Start Building Credit from Scratch

How does the video say a checking account might be helpful?

GRAPH: Comparing FICO Credit Scores

QUESTION OF THE DAY: What's the average credit score needed to rent an apartment?

Take a guess: What’s the average credit score needed to rent an apartment?

In a competitive rental market, where demand for apartments exceeds supply, how could a high credit score be toward your advantage?

INFOGRAPHIC: Why Does Your Credit Score Matter?

If they’re not lending you money, what motivation would these other people or businesses have to request your credit score?

Does this seem fair? Why or why not?

How does that APR difference impact their monthly payments and total interest?

Hypothesize: What if they were buying a car with a $42,000 principal instead?

If someone asked you, “Why should I bother worrying about my credit score?” what would you say?

EDPUZZLE: Boost Your Credit Score

Select all of the ways to build and maintain a good credit score.A. Pay your bills in full each monthB. Pay all of your bills on timeC. Keep your credit utilization lowD. Open new lines of credit each month

VIDEO: How to Start Building Credit from Scratch

How does the video say a checking account might be helpful?

Why else might a checking account be convenient as you try to build credit?

If you have no credit history, why might a bank be more likely to issue you a secured credit card rather than a typical unsecured credit card?

Franklin mentions to his friend Yasmin that he’s planning to open a secured credit card. Yasmin says, “Isn’t that basically the same thing as using a prepaid or gift card?” Is Yasmin right? Explain.

Applying for and receiving federal student loans does not require a credit check. If a federal student loan was the first type of credit you had access to, how could that help or hurt your credit score?

GRAPH: Comparing FICO Credit Scores

Does this relative frequency histogram have a normal distribution? How can you tell?

Generally speaking, a “poor” FICO credit score is below 580 points. If you round that up to 599 so that it better fits the information in this graph, what percent of the population is considered to have poor credit in 2022?

What range of credit scores saw the largest increase between 2020 and 2022? How large was the increase?

Describe how the distribution of FICO credit scores has changed between 2018 and 2022.

What impacts might this change in credit scores have on the typical American household’s finances?

How does that APR difference impact their monthly payments and total interest?

Hypothesize: What if they were buying a car with a $42,000 principal instead?

Select all of the ways to build and maintain a good credit score.A. Pay your bills in full each monthB. Pay all of your bills on timeC. Keep your credit utilization lowD. Open new lines of credit each month

Why else might a checking account be convenient as you try to build credit?

If you have no credit history, why might a bank be more likely to issue you a secured credit card rather than a typical unsecured credit card?

Franklin mentions to his friend Yasmin that he’s planning to open a secured credit card. Yasmin says, “Isn’t that basically the same thing as using a prepaid or gift card?” Is Yasmin right? Explain.

Applying for and receiving federal student loans does not require a credit check. If a federal student loan was the first type of credit you had access to, how could that help or hurt your credit score?

Does this relative frequency histogram have a normal distribution? How can you tell?

Generally speaking, a “poor” FICO credit score is below 580 points. If you round that up to 599 so that it better fits the information in this graph, what percent of the population is considered to have poor credit in 2022?

What range of credit scores saw the largest increase between 2020 and 2022? How large was the increase?

Describe how the distribution of FICO credit scores has changed between 2018 and 2022.

What impacts might this change in credit scores have on the typical American household’s finances?

Select all of the ways to build and maintain a good credit score.
A. Pay your bills in full each month
B. Pay all of your bills on time
C. Keep your credit utilization low
D. Open new lines of credit each month

Select all of the ways to build and maintain a good credit score.
A. Pay your bills in full each month
B. Pay all of your bills on time
C. Keep your credit utilization low
D. Open new lines of credit each month