Credit

By the end of the unit, students can

• explain what goes into a credit score and what doesn’t, and how to build one from nothing
• use a credit card without paying interest, and explain the grace period and how it’s lost
• compare loans by total cost, and read an amortization schedule
• explain what goes into a mortgage payment, down payments, and fixed against adjustable rates
• tell federal student loans from private ones, and set a sensible limit on borrowing

The lessons

Each ends with a one-question check, and students who pass the unit quiz can go on to three optional stages of harder lessons, for bronze, silver and gold medals.

1. 4.1Credit scores8 min

   There is a number that follows you around. Nobody told you it existed until it already mattered.

2. 4.2Credit cards8 min

   The difference between the best deal in personal finance and the worst is one behavior.

3. 4.3Loans7 min

   Negotiate the total price, then the rate. Look at the monthly payment last.

4. 4.4Mortgages9 min

   A lender will approve you for a number that assumes you spend nothing on anything else.

5. 4.5Student debt8 min

   Do not borrow more in total than you expect to earn in your first year out.

New Jersey Standard 9.1

The grade 12 expectations this unit teaches, quoted from the state’s standard. See the full alignment for every unit.

• 9.1.12.PB.6Covered

  Describe and calculate interest and fees that are applied to various forms of spending, debt and saving.

  In this unit: Credit cards

• 9.1.12.CDM.1Covered

  Identify the purposes, advantages, and disadvantages of debt.

  In this unit: Loans

• 9.1.12.CDM.2Covered

  Compare and contrast the advantages and disadvantages of various types of mortgages.

  In this unit: Mortgages

• 9.1.12.CDM.3Covered

  Determine ways to leverage debt beneficially.

  In this unit: Mortgages

• 9.1.12.CDM.4Partly covered

  Identify issues associated with student loan debt, requirements for repayment, and consequences of failure to repay student loan debt.

  In this unit: Student debt, Income-driven repayment, worked out (Silver stage)

  The consequences of default are not covered.

• 9.1.12.CDM.5Covered

  Identify the types of characteristics of predatory lending practices and the importance of collateral (e.g., payday loans, car title loans, high-risk mortgages).

  In this unit: Loans

• 9.1.12.CDM.6Covered

  Compute and assess the accumulating effect of interest paid over time when using a variety of sources of credit (e.g., student loans, credit cards, auto loans, mortgages, etc.).

  In this unit: Credit cards, Loans

• 9.1.12.CDM.7Covered

  Calculate a mortgage payment based on type of loan, down payment, credit score, and loan interest rate.

  In this unit: Mortgages, Credit scores, How much house, really (Silver stage), Points and refinancing: break-even math (Silver stage)

• 9.1.12.CDM.8Covered

  Compare and compute interest and compound interest and develop an amortization table using business tools.

  In this unit: Mortgages

• 9.1.12.CDM.9Covered

  Summarize the causes and consequences of personal and corporate bankruptcy and evaluate the implications for self and others.

  In this unit: Default, collections, and bankruptcy (Gold stage)

• 9.1.12.CP.1Partly covered

  Summarize how one’s credit history can affect finances, including loan terms, employment, and qualifying for loans.

  In this unit: Credit scores

  Loan terms and approval are covered; employment checks are not.

• 9.1.12.CP.2Covered

  Identify the advantages of maintaining a positive credit history.

  In this unit: Credit scores

• 9.1.12.CP.3Covered

  Summarize factors that affect a positive credit rating, including on-time payments, debt versus available credit, length of open credit, and how often you apply for credit.

  In this unit: Credit scores

• 9.1.12.CP.4Covered

  Identify the skill sets needed to build and maintain a positive credit profile.

  In this unit: Credit scores, Credit cards

• 9.1.12.CP.5Covered

  Create a plan to improve and maintain an excellent credit rating.

  In this unit: Credit scores, The CARD Act and the fine print (Bronze stage)

• 9.1.12.CP.6Partly covered

  Explain the effect of debt on a person’s net worth.

  In this unit: Mortgages

• 9.1.12.CP.7Covered

  Summarize factors that affect a particular credit scoring system.

  In this unit: How credit scores are built (Gold stage)

• 9.1.12.CP.8Covered

  Identify different ways you can protect your credit.

  In this unit: Your report, disputes, and freezes (Bronze stage)

• 9.1.12.CP.9Covered

  Analyze the information contained in a credit report, how scores are calculated and used, and explain the importance of disputing inaccurate entries.

  In this unit: Your report, disputes, and freezes (Bronze stage), How credit scores are built (Gold stage)

• 9.1.12.EG.6Covered

  Analyze the rights and responsibilities of buyers and sellers under consumer protection laws.

  In this unit: The CARD Act and the fine print (Bronze stage)

• 9.1.12.FI.1Covered

  Identify ways to protect yourself from identity theft.

  In this unit: Your report, disputes, and freezes (Bronze stage), Credit scores

Questions for discussion

1. A salesperson asks, “What monthly payment can you afford?” Why does Lesson 4.3 say to look at the monthly payment last?
2. One setting, autopay at the minimum or at the full balance, decides whether a credit card is the best deal in personal finance or the worst. Who wins in each case, you or the card company?
3. “Don’t borrow more in total than you expect to earn in your first year out.” Try the rule on a school and a career you are considering. What does it tell you?