understanding credit assignment

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Unit 3: Consumer credit

About this unit, credit score.

• Real world: A Tale of Two Credit Scores (Opens a modal)
• What is a credit score? (Opens a modal)
• How do I raise my credit score? (Opens a modal)
• What is a credit report? (Opens a modal)
• Understanding credit score Get 3 of 4 questions to level up!

Credit cards

• What is a credit card? (Opens a modal)
• Choosing a credit card: credit card types (Opens a modal)
• Choosing a credit card: what to look for (Opens a modal)
• Schumer boxes and the things you should know about your credit cards (Opens a modal)
• Understanding credit card terms (Opens a modal)
• Which credit card is better for you? (Opens a modal)
• Credit cards: the good and the bad (Opens a modal)
• Credit cards Get 3 of 4 questions to level up!

Payment methods

• Payment methods intro (Opens a modal)
• Using cash vs. credit card, and other payment methods (Opens a modal)
• Scenario: comparing payment methods (Opens a modal)
• Comparing payment methods (Opens a modal)
• Different payment methods Get 3 of 4 questions to level up!

CREDIT Credit and Credit Cards Lessons and Worksheets

Our Credit section also offers a variety of teaching resources. These resources include lesson plans, worksheets, educational videos, informational articles, and more.

Our lesson plans and worksheets are designed to help educators teach their students about credit and financial responsibility. These resources are customizable and can be used in a classroom setting or for independent study.

Our educational videos offer a dynamic way to learn about credit, featuring engaging animations and clear explanations of complex concepts. And our informational articles provide in-depth analysis and expert insights on all aspects of credit.

No matter your learning style or educational needs, the Credit section of Money Instructor has a wealth of resources to help you master the fundamentals of credit and manage your finances with confidence.

Also, see our spending money category for more consumer related material.

Understanding Credit and Credit Cards

Credit cards, like loans, allow you to build up a credit history. This may help you with credit related activity such as getting a student loan, car loans, renting an apartment, or buying a house. Credit cards are also convenient since they provide a reduced need to carry cash or checks, and provide security in case of an emergency.

However, credit cards are not for everyone, and if you have one you need to act responsibly. You need to be able to afford a credit card, and also need to try to pay off the balance each month. The over-use of credit cards has been a major reason why so many individuals have too much debt, and why bankruptcy rates are high.

Consumers are bombarded with offers from credit card companies, offering various incentives and interest rate options. For those that fall into the credit trap, being in debt seems almost forever. Meanwhile, high interest charges and late payment fees eat up most of their available money. Many credit card holders do not even know how much they are paying in interest, and what impact it has on their overall financial well-being.

Use the following lessons to help teach and learn credit card basics:

Credit Lessons and Worksheets

WHAT IS CREDIT VIDEO LESSON

What is a Credit? Basics of Credit

This lesson explains what credit is and how it works, including the types of credit available and how to obtain it. It also emphasizes the importance of using credit responsibly and paying bills on time to maintain good credit standing and secure better interest rates and terms.

What is Credit Score? Beginner's Guide to Credit

This lesson explains credit scores, a number that represents your creditworthiness to lenders, in an easy to understand way. Understanding your credit score is crucial for managing your finances, whether you’re just starting to build credit or have been doing so for a while. Students will understand the importance of credit scores and learn how to manage their finances to improve their credit score, and the importance of monitoring their credit report.

Building and Maintaining Credit

This introductory lesson teaches important tips on how to build credit by using credit cards and loans responsibly, how to maintain good credit by making payments on time and keeping credit utilization low, and how to monitor credit reports to ensure accuracy.

Introduction to Credit Cards

A worksheet introducing students to credit cards, credit, and paying interest.

WHAT IS A CREDIT CARD VIDEO LESSON

What is a Credit Card?

A video lesson introducing students to credit cards, how you get it, and advantages and costs.

Credit Cards and How They Work

Students learn how credit cards work. Learn about the concept of credit, and how you are charged for using a credit card.  Also information on debit cards.

Cash verse Credit

An introduction to the concept of using cash verse using credit cards.  Students learn why credit cards may be good or bad, depending on how they are used.

Choosing the Right Credit Card

Students learn important criteria for choosing a credit card and the importance of using credit wisely.

How to Apply for a Credit Card

In a lesson on obtaining their first credit card, students are educated about the importance of identifying their card needs—whether for building credit, earning rewards, or emergency use. They are introduced to the nuances of various card types, from secured to student and rewards cards, each with its benefits and fees. Essential application details such as Social Security Number, employment, and income are discussed, along with the ease of online application. Emphasis is placed on grasping the credit limit, APR, and the importance of settling balances promptly to avoid hefty interest charges. Ultimately, the lesson underscores the significance of responsible credit card use for long-term financial health.

Reading a Credit Card Statement

An introduction to reading a credit card statement. Learn to read and identify the important items on a monthly credit card statement.

How to Read a Credit Card Statement

Students will learn to understand their credit card statements, using a comprehensive guide that covers various aspects such as billing cycles and interest charges. They will acquire skills to manage their finances efficiently, ensuring timely payments and maintaining a favorable credit score.

Credit Card Statement - Incorrect Transactions

Advanced practice reading and correcting a monthly credit card account statement.  Students must identify and correct their monthly statement.

APR Explained | How Credit Card Interest Works Lesson

A lesson for students on how APR (Annual Percentage Rate) influences credit card interest, its compounding effects, and strategies for smart credit card use. They dive deep into understanding the true price of borrowing money on a credit card and how interest accumulates. They grasp the difference between an annual percentage and the compounding effect of daily periodic rates. Students also discover terms like “introductory APR” and “balance transfer APR,” understanding their role in financial decisions. Additionally, the lesson emphasizes the importance of paying off the full balance each month, highlighting the benefits of credit cards when used responsibly, such as cashback, rewards, and building credit history.

Compound Interest Trap of Credit Cards and Loans Lesson

In this lesson, students explore the complex world of credit card interest debt, unveiling how compound interest, while beneficial for growing investments, can escalate credit card debts. Key terms like Annual Percentage Yield (APY) and compounding frequency are introduced, illustrating how frequent compounding by credit card issuers can quickly amplify debts, especially with minimal repayments. The lesson stresses the importance of timely repayment of high-interest debts and prudent evaluation of interest rates and compounding frequencies when considering loans or credit card agreements, aiming to empower students with the knowledge to make informed financial decisions and avoid the snare of mounting debts.

DEBIT CARDS

What is a Debit Card Lesson

A lesson on banking basics and the essentials of debit cards and how they compare to credit cards, including how they function, their benefits and drawbacks, and tips for wise usage. Students learn how to manage their debit card use responsibly. We’ll also discuss the potential drawbacks, such as vulnerability to theft and its inability to help build your credit history.

ADDITIONAL LESSONS - BORROWING MONEY

Borrowing Money: Remember the Interest

Students learn about the reasons and responsibilities of borrowing money.

Sources of Credit: It Is In Your Interest? Students learn about sources of credit and calculating interest rates.

Your Credit Score Students learn about credit scores.

Consumer Credit Legislation Students learn about consumer credit legislation.

ADDITIONAL LESSONS - CREDIT AND CREDIT CARDS

I was playing Wordle and this happens

Video lesson starter. Here is a fun class or lesson starter for the TikTok and YouTube generation of students on the topics of money and saving and having too much debt, especially credit card debt.

Credit Cards: More Than Plastic

Students learn about credit cards.

Credit Cards: Shopping Online Students learn about online shopping with credit cards.

Beware! Consumer Fraud

Students learn about consumer fraud.

Beware! Identity Theft Students learn about identity theft.

Credit Reports – You Thought Your Report Card Was Important Students complete an activity sheet and discuss the advantages and disadvantages of using credit. Students read a scenario about a young person's use of a credit card and answer some questions regarding repayment. Students learn about credit history, credit reports and credit-reporting agencies.

Creditors’ Criteria and Borrowers’ Rights and Responsibilities Students discuss key terms related to credit and learn how creditors use capacity, character and collateral as criteria for making loans. Students learn about credit rights and responsibilities. Groups use role-play scenarios in order to identify and discuss the rights and responsibilities of using credit.

So How Much Are You Really Paying for that Loan? Students learn what a payday loan is and the high cost involved in using such a loan. Working in groups, students calculate an annual percentage rate (APR) on a short-term loan.

To Rent-to-Own or not to Rent-to-Own? Students review the elements of a contract. They discuss the characteristics of rent-to-own contracts and compare the cost of those contracts with the outright purchase of goods.

Using Credit Cards Advantages and disadvantages of using credit cards.

Using Credit Wisely Learn why we have such poor credit habits, and what we can do to use credit wisely.

Federal Protections for Credit Card Users Understand your Federal protections for consumer credit card holders.

What's your Credit Score? Understand your credit score for applying and qualifying for a mortgage loan.

More on Credit Cards, Consumer Credit, and Debt Management Informational resources on using credit cards wisely, credit repair, reducing credit card debt, basics on understanding credit reports, tips, advice, and help for managing debt, debt consolidation, student loans, understanding bankruptcy, how to consolidate credit, and more.

Back to more Earning and Spending Worksheets and Lesson Plans

More Teaching Money Lessons

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How Credit Works: Understand The Credit History Reporting System

If you only have 15 seconds to learn how credit works, memorize the graphic above. It shows you the six key factors that make up your credit score, the three-digit number that summarizes the entire US credit reporting system and determines whether you can get approved for a loan or a credit card.

The keys to a good credit score are paying your bills on time, having a mix of accounts (credit cards and loans), and keeping these accounts in good standing for many years.

But, have you ever wondered: How does credit work? Why do you need a credit report, anyway?

Why do we have credit reports and scores?

The credit history reporting system helps banks avoid lending money to customers who are already overextended or who have a history of not paying their debts.

Less than 100 years ago, banking was a very personal experience. If you wanted to borrow money, you would need to walk into a local bank and personally convince a loan officer to give you the loan. You would have needed to show proof of employment and, quite possibly, personal references who could vouch for your character.

Back then, nearly all lending was secured, meaning you would need to put up collateral in order to take out the loan. The most common example of a secured loan is a home mortgage in which the bank takes an interest in the property.

Since then, the rise of credit cards as a convenient, electronic purchasing tool has made unsecured lending quite common. And although unsecured lending can be more profitable for banks, it’s also highly risky because there’s no collateral for the bank to repossess if the debtor doesn’t pay back the loan.

As a result, the credit report system was created to give banks a centralized source of information about potential borrowers.

» MORE: Get free credit scores and monitor your credit health.

When did credit reporting start?

By the late 1950s and early 1960s, banks began collaborating to share customer credit data including account balances and payment histories.

These early “credit bureaus” were small and limited to individual communities. By 1970, however, a few large companies emerged as leaders in credit reporting. These companies would become the three credit bureaus we know today: TransUnion, Experian  (with enrollment in Experian CreditWorksSM), and Equifax.

In 1970, Congress first passed the  Fair Credit Reporting Act (FCRA) to regulate how credit reporting companies handled consumers’ personal information, but credit reporting was still primitive compared to the comprehensive reports we have today. By the early 1980s, credit bureaus began to electronically store the detailed personal information (Social Security numbers, addresses, dates of birth) as well as the loan, inquiry, and payment data that still comprise our credit reports today.

What information is on your credit report?

Your credit report contains information that identifies you, such as your name, address, and Social Security number and information about your borrowing activity, such as loan applications, balances, and payment histories.

In addition to your name, Social Security number, and date of birth, your report may also contain previous addresses and employment information. Despite all of this unique information, credit report mix-ups are still quite common, especially if you have a common last name like Jones or Brown.

The bulk of your credit report contains detailed information about recent activity on your financial accounts. This includes:

• Credit inquiries : Any time you apply for credit—whether or not you are approved.
• Open loans : Data will include the bank, the loan amount, the date you opened the loan, your monthly payment amount, and your payment history.
• Open revolving accounts : These are your credit cards. Data includes the bank, your credit limit, the date you opened the account, your payment history, and the balance on the account as of your last statement date.
• Closed accounts : Accounts will remain on your report even after they are closed for up to seven years.
• Collections accounts : In the event you have a bill sold to collections, this account will appear on your credit report. This can happen even if the original debt wasn’t included on your credit report, such as a medical bill.
• Public records : These include tax liens, court judgments, and bankruptcy filings.
• Comments : Credit bureaus give you the ability to add comments to your credit report to explain records. Creditors can also add comments.

One thing your credit report does not contain is your credit score . The credit report is designed to track your credit history. The score is issued based on the information.

How do banks use your credit report?

Today, companies use the data in your credit report to create credit scores, which most lenders will use in their underwriting as an alternative to manually reading your credit file.

That said, you can expect an underwriter to look more closely at your credit report when you’re applying for a larger loan—such as a mortgage—or in cases where your credit score is “on the fence.”

In addition to approving your loan, your credit may determine how much you’ll pay for the credit. The higher your credit score is, the less interest bank will charge you for the loan.

Who cares? Well, you should if you care about saving money. For example, the difference in total interest payments on a $250,000, 30-year mortgage between a 5% interest rate and 8% interest rate is about $179,000. That is the cost of less-than-perfect credit.

Sometimes, companies will use your credit score for other decisions, too.

For example, you might be asked to submit to a credit check when renting an apartment or applying for a job that involves financial responsibility. (Some employers have used credit checks more broadly in their hiring process. I think that practice has dubious value, but it’s yet another reason to take care of your credit.)

Finally, insurance companies often use a specific version of your credit score in determining how much you’ll pay for car insurance.

What is a credit score?

A credit score is a three-digit number derived from the data in your credit report that indicates how likely you are to repay a loan on time in relation to other borrowers.

Different companies produce different credit scores under brand names like FICO Score and VantageScore.

Each of these companies may have several different versions of their score for different end uses (for example, one for mortgage lenders, one for credit card banks, another for car insurance companies).

Finally, each of these credit scores may differ depending on which of your three credit reports was used to pull the data. There are three credit bureaus: TransUnion, Experian  with enrollment in Experian CreditWorksSM, and Equifax. Although most of your credit report will be the same across all three, there can be differences.

FICO Scores, which are used by 90% of lenders, are a highly trusted measure of whether a loan will be paid on time. Other types of scores simply use payment history to calculate your score, whereas FICO’s algorithms calculate your creditworthiness based on the information found in your credit report.

In general, however, all credit scores fall somewhere on a range between 350 and 900. The higher the score, the better your payment history and creditworthiness. A lower score means banks will consider you a higher risk customer.

What is a good credit score?

Although it depends on which score you’re looking at, you can be confident that a score of 720 is “good” on most scales, while a score of 800 is “very good” on most scales.

If you have a score of at least 700, you’ll have the best chance of getting approved for the best credit card offers, auto loan rates, and mortgage rates .

Scores in the high 600s aren’t necessarily bad, but they won’t qualify you for all loans or the best rates. With a sub-700 credit score, you could also still be declined for many of the best credit card offers .

Finally, it’s important to note that once your credit score approaches the high 700s to low 800s, any further increases won’t do much for you…banks will already give you the best rates. (It’s like if a prof awards an A+ to numerical grades of 97-100, once you hit 97 there’s no additional benefit to getting a 98 or 99, etc.)

How do you get a good credit score?

There are three big components to a good credit score: establishing a healthy mix of loans and revolving accounts over time, paying bills on time (every time), and avoiding high levels of debt.

How long does it take to build a good credit score?

The first step—building credit by establishing a healthy mix of loans and revolving accounts—is often the trickiest, because it’s a catch-22: You need to get credit before you have a credit history, but it’s difficult to get credit before you have a credit history!

There are several ways to establish credit for the first time, but it’s arguably easier to do when you’re young and either in college or still dependent on your parents. For example, you can:

• Ask a parent to make you an authorized user on one of their credit cards.
• Take out a federal student loan, which generally does not require a credit check.
• Take out a loan with a cosigner.
• Get a secured credit card, which works like a prepaid debit card except it builds credit.
• Get a credit builder loan.
• Use a free service like Experian Boost™ , which allows you to benefit from on-time payments that otherwise wouldn’t be included in your credit profile.

Once you have one open account, it becomes easier to get additional accounts after about six months. Over time, you’ll get the best credit score when you have at least one or two credit cards and one or two loans (like student or auto loans). That said, having more accounts is not necessarily better.

Finally, a key part of credit scoring is time. It typically takes three years of responsible credit use to have an average credit score in the mid to high 600s and up to seven years to develop a very good credit score of 700 or more.

Why is paying your bills on time so important?

Your payment history accounts for approximately 35% of your credit score , more than any other factor. Making consistent on-time payments is the number one thing you can do to build a good credit score.

Not surprisingly, nothing will wreck your credit score faster than failing to pay these bills on time. The longer you take to pay them (and the more often you’re late), the lower your credit score will fall.

An example: I’ve had fairly good credit all my life, but once many years ago I screwed up and paid two bills late (just by a few days). My credit scores fell by an average of 60 points and it took two years to fully recover.

How does debt affect your credit score?

Too much debt is bad for your finances and it’s bad for your credit score, too. Your overall debt level accounts for 30% of your credit score.

Credit-card utilization (or how much of a balance you carry in relation to your credit limit) affects your credit score. The higher your combined balances in relation to your combined credit limits, the more your credit score will suffer. For the best credit score, you want to keep this “utilization ratio” as low as possible.

Keep in mind that even if you pay your balance in full every month, your credit report reflects your card balance on the last day of your billing cycle. If you frequently use most of your available credit each month, your credit score will suffer even though you’re paying the balance in full every time. You can avoid this by paying off most of your balance on the day before your credit card billing statement closes. Your credit report will show a $0 balance—or close to it.

Other factors affecting your credit score

Other factors that affect your credit score include the average age of your credit accounts (credit file age), account diversity, recent credit inquiries, and public records. With the exception of public records, each of these factors make up about 10 to 15% of your credit score.

The longer you have had credit accounts open, the better. If you don’t have to cancel an old, unused credit card, don’t.

Your credit score won’t be as good as it could be if you only have credit cards or only have loans.

Finally, try to limit credit applications to no more than two every six months. Checking your own credit score is known as a “soft inquiry” and does not count toward this limit.

Too many credit applications in a short period of time can cause your score to go down because it looks like your desperate for credit. There’s an exception, however, for credit inquires of the same nature that indicate you’re rate shopping. If these inquiries are within a month or so of each other, they will generally only be counted as one inquiry.

Public records are one thing you definitely do not want on your credit report, because it usually means that someone has taken you to court over a debt. Many, like tax liens or credit judgments, can drag your score down for years.

A bankruptcy filing can be the kiss of death to your credit score, at least for a number of years. Your credit score can recover from bankruptcy, but it will take between seven and 10 years. Like building credit from scratch, the hardest part will be getting your first one or two credit accounts after bankruptcy. With few exceptions, this usually means starting with a secured credit card.

How do you fix bad credit?

The same way you build good credit! By paying your bills on time and staying out (or getting out) of debt.

Unless you’ve been the victim of identity theft or otherwise have errors on your credit report, the only way to “repair” your credit is to pay your bills, pay down debt over time, and limit applying for new credit.

Expect it to take between one to two years of responsible credit management to make an impact on a troubled credit score (longer in the case of bankruptcy), and be wary of anybody who tries to sell you shortcuts to a better credit score.

For more, read our article on how to repair your credit on your own.

How do you track your own credit?

These days it’s easy to track your credit score with any number of free credit reports and scores. Many credit cards even provide your FICO Score on monthly statements, too.

You can sign up for a monthly credit monitoring service. There are both free and paid credit tracking services. The free services will typically give you one version of your credit score and a limited look at your credit report. Paid services are more likely to give you access to all of your credit scores and/or complete access to your credit report.

In the United States, the best way to review all three of your credit reports for free is to go to annualcreditreport.com . The US government mandates that all consumers can receive each of their three credit scores from this site once a year for free. While checking your complete reports at least once a year is the bare minimum, I would also recommend using another free credit monitoring service to routinely monitor your score and get alerted to any problems.

It’s important to re-emphasize that your credit report will not contain your credit score. For that, you can sign up for a service like myFICO if you don’t receive the information from your lending institution or credit card provider. Make sure you’re keeping an eye on your FICO score, as it’s the one most likely to be used when you apply for credit in the future.

Credit monitoring is also really helpful if you’re getting ready to apply for a mortgage or you suspect you’re susceptible to someone else trying to use your credit information.

About the author

Chris Muller

Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He’s also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016.

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Understanding Credit

What is Credit?

Credit is the ability of the consumer to acquire goods or services prior to payment with the faith that the payment will be made in the future. In most cases, there is a charge for borrowing, and these come in the form of fees and/or interest.

Establishing Good Credit

A good credit score can impact multiple areas of your life, including your ability to rent or buy a house, job opportunities, loans, and more, so establishing a good credit score now will pay off in the future.

What is Considered a Good Credit Score?

The FICO credit score ranges from 300 to 850, with the lower scores representing higher credit risk. A good credit score is generally considered to be anywhere from 690 to 850, with 850 being an excellent credit score.

Here are ways to start establishing good credit:

• Open a checking and savings account
• Pay bills on time
• Pay down outstanding balances
• Check credit report yearly
• Protect your identity

Five Components of a Credit Score

• Payment History (35%)
• Ratio of Debt to Available Credit (30%)
• Length of Credit History (15%)
• Types of Credit Used (10%)
• Recent Searches for Credit (10%)

Checking Your Credit Report

A credit report contains your personal information along with your overall credit history, inquiries made by companies to view your credit information, and more. Checking your credit report frequently will prevent inaccuracy in your credit information that may lead to a lower credit score and consequently, the denial of credit, loans, or even a job.

Tip: Remember to check the name, address, birthdate, Social Security number, and accuracy of accounts on your credit report.

Where Can You Access Your Credit Report?

When it comes to checking your credit report, there are three nationwide credit reporting agencies that will provide you with a free credit report, upon request, once every 12 months. These three agencies are:

To request a free credit report from any of these agencies, visit annualcreditreport.com or call 1-877-322-8228.

Tip: Instead of checking your credit report from all three agencies at once, spread them out every few months so that you can monitor your credit throughout the year for free.

What is a Credit Card?

A credit card is essentially a means of borrowing money that is accompanied by interest and sometimes fees. It is also a revolving line of credit, meaning you can repeatedly borrow money on one account up to a set limit. Before applying for a credit card, you should first consider the advantages and disadvantages of using one.

• Use for emergencies
• Buy now, pay later
• Purchase protection
• Helps establish good credit if used wisely

Disadvantages

• High interest/annual fees
• Increase your debt
• Establish poor credit if not used wisely

Tips to Stay in Control of Your Credit Card

• Use only one credit card
• Shop for the best credit card
• Consider a secured card- a type of credit card that requires a cash collateral deposit that becomes the credit line for that account
• Don’t charge anything you can’t pay for
• Pay your monthly bill on time and in full

Credit Card Warning Signs

It’s often easy to miss a payment due date or unknowingly build up an exorbitant amount of debt, leaving you in bad standing with your credit card company. Be sure to actively track your expenses and bills, and watch out for warning signs of uncontrolled credit usage. This may take the form of paying off one credit card with another or only making the minimum payment. If you are having trouble making your credit card payments, call your credit card company, they may be willing to work out a payment plan with you.

Alternatives to Credit Cards

If you are uncertain about getting a credit card, or want to adjust your credit usage, there are some convenient alternatives, including cash, a debit card, a secured credit card, a prepaid card, or a loan (for larger purchases).

Getting a Credit Card

There are many important elements to consider when reading a credit card offer. Every credit card company is required to outline the fine print of their credit cards in what is called a Schumer box . The Schumer box standardizes all of the pertinent information you will need to know to compare credit card offers. Each Schumer box will include:

As with other bank cards, a credit card comes with several different types of fees. Some of the most common fees include late fees, which are imposed when minimum payments are not paid on time, and over-the-limit fees that are charged when you exceed the credit limit.

Interest Rate

This is the rate at which credit card companies charge you for using their card. Rates can vary widely and range from 6% to 36%, depending on the credit institution and the borrower’s credit history. You will not be charged interest if you don’t carry a balance on your card from month to month and instead pay off your full credit card balance each month.

An APR is offered by a credit card company as a single sum of the total price of borrowing money . It is calculated on an annual basis and generally cannot be changed for the first 12 months unless it is a promotional or variable rate. Grace Period

A grace period is the time you have before you’ll be charged interest on your purchases – generally between 20 days to a month. To receive a grace period, you need to meet these two conditions:

• Pay your new balance in full for the billing period
• Pay the balance in full before the payment due date

No grace period is given if you only make the minimum payment, meaning that you’ll be charged interest on your future purchases starting on the date you make the purchase.

Tip: Easily compare credit offers through websites like NerdWallet , Bankrate , MoneyTips , and Credit Karma .

To schedule a one-on-one appointment with a Center for Financial Wellness peer mentor, email [email protected] or request a financial wellness presentation for a student group.

For Teachers

Home » Teachers

Credit and Credit Card Comparison Worksheets

Check out these fun worksheets to help you teach your students about credit and how to compare credit cards.

A good understanding of credit – particularly credit cards – will carry your students far. Knowing how to compare credit cards is essential to a safe and productive financial future, and finding the right resources can be the difference. Check out these worksheets teachers and homeschoolers can use for students of all ages.

Understanding Credit Worksheets

Before jumping into credit card comparisons, students need a solid comprehension of what credit is. These worksheets help demonstrate the concept.

• Sharing A Story About Borrowing: This worksheet goes along with a story the kids read about borrowing, introducing young students to the idea of credit. ( Grades 2-5)
• Borrowing and Lending Money: Students complete a story about being a good borrower in this worksheet . ( Grades 2-5)
• Becoming a Trustworthy Borrower: Young learners see how to borrow, why it is necessary sometimes, and how to pay back or return things responsibly. ( Grades 1-5)
• Avoiding Debt: Credit can be good or bad, and students see how to handle situations that turn dangerous in this worksheet . ( Grades 6-8)
• Credit: This extensive worksheet covers many sub-topics of credit, showing kids the concept clearly. ( Grades 9-12)

Understanding Credit Cards Worksheets

Credit cards can be a crucial tool for adults, but knowing how to use them responsibly is crucial. These worksheets walk students through the details of credit cards and how to use them to their advantage.

• Economics – Credit Cards: This worksheet breaks down credit cards, and students must identify their various features and terminology. ( Grades 5-10)
• Analyzing Credit Card Statements: This worksheet has students look closely at a credit card statement to understand the terms, ensuring that kids know how to monitor their credit card usage. ( Grades 6-8)
• Credit Cards: These worksheets provide details about credit cards and offer students valuable practice working with them. ( Grades 9-12)
• Getting A Credit Card And Using It Wisely: This worksheet shows kids how credit cards work and why interest rates matter. ( Grades 9-12)
• Debit Cards vs. Credit Cards: This worksheet requires students to compare debit and credit cards, showing them the key differences. ( Grades 7-10)

Credit Scores and History Worksheets

Students need to know how credit scores factor into their financial picture, including which credit cards they can qualify for, interest rates, and credit limits. These worksheets build background and show students the importance of having good credit.

• Understanding Credit Scores: This worksheet has students match definitions and answer comprehension questions about credit scores. ( Grades 6-8)
• Understanding Credit Scoring Exercise: This worksheet (link opens download) involves students determining various situations on their credit scores. ( Grades 9-12)
• Credit Scores and Reports: This worksheet shows kids various types of credit like credit cards, how credit scores change, and the vocabulary involved in the concept. ( Grades 7-12)
• Credit Score Student Handout: This worksheet shows students how to calculate scores and see which factors weigh the most in their credit history. ( Grades 9-12)
• A Tale of Two Credit Scores: This worksheet shows students how credit scores can vary drastically between two similar people, showing them the effects of good and bad scores. ( Grades 9-12)

How to Compare Credit Cards Worksheets

Now that students understand credit, credit cards, and how their scores affect acceptance and terms, they can compare credit cards to find the best fit. These worksheets show kids the tricks to landing the best credit cards for their situations.

• What Interest Rate Do Consumers Pay On Credit Cards? This worksheet shows students the variation of interest rates on credit cards today, highlighting the importance of having a good credit score and showing them reasonable rates as they shop for a card. ( Grades 9-12)
• Credit Card Comparison: This worksheet requires students to compare several credit cards, breaking down their APR, grace periods, annual fees, and more. ( Grades 7-12)
• Comparison Shopping For A Credit Card: Students compare three specific credit cards in this worksheet and then write down reasons they would choose one. ( Grades 9-12)
• Shopping For a Credit Card: In this worksheet, students conduct a side-by-side analysis of two credit cards, determining why one would be better than the other for different individuals. ( Grades 6-12)
• Credit Cards: This worksheet goes into depth about how to compare credit cards. Students need to research to find specific card features, like dates that interest begins accruing and late payment fees. ( Grades 9-12)
• Credit Card Comparison Chart: This worksheet shows students how to find crucial information when comparing cards, including over-the-limit fees and penalty APRs. ( Grades 9-12)
• Card Comparison Shopping: This worksheet prefills information on three cards and has students look up two more, deciding the specific advantages for each. ( Grades 6-12)

Head over to our center for teachers about how to teach credit to students for lesson plans, learning objectives, teaching tips, and more!

6. What is a FICO ® Score?

A) One of many types of credit scores B) How much of your credit you're currently using compared to the total amount available to you C) How many times you've recently applied for credit D) How many times you've made a payment late or missed a payment

A.  A  FICO Score  is a type of credit score developed by the Fair Isaac Corporation. Like other types of credit scores, a FICO score is a three-digit number, based on information in your credit reports, that is designed to represent your credit risk, or the likelihood you will pay your bills on time.  

7. Your credit scores are calculated using information from:

A) A background check B) Your friends and neighbors C) Information in your credit reports D) Your employer  

C. Your credit scores are calculated using information in your credit reports, although there are many different credit scoring model s . If you have negative information, such as late or missed payments, on your credit reports, your credit scores typically will be impacted.

Checking your credit reports and credit scores regularly may help you better understand your credit situation. You're entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com.

You can also create a  myEquifax account  to get  six free Equifax credit reports  each year. In addition, you can click “Get my free credit score” on your myEquifax dashboard to enroll in  Equifax Core Credit ™ for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score, based on Equifax data. A VantageScore is also one of many types of credit scores. 

Get your free credit score today!

We get it, credit scores are important. A monthly free credit score & Equifax credit report are available with Equifax Core Credit TM . No credit card required.

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• Options and Derivatives
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Assignment: Definition in Finance, How It Works, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Is an Assignment?

Assignment most often refers to one of two definitions in the financial world:

• The transfer of an individual's rights or property to another person or business. This concept exists in a variety of business transactions and is often spelled out contractually.
• In trading, assignment occurs when an option contract is exercised. The owner of the contract exercises the contract and assigns the option writer to an obligation to complete the requirements of the contract.

Key Takeaways

• Assignment is a transfer of rights or property from one party to another.
• Options assignments occur when option buyers exercise their rights to a position in a security.
• Other examples of assignments can be found in wages, mortgages, and leases.

Uses For Assignments

Assignment refers to the transfer of some or all property rights and obligations associated with an asset, property, contract, or other asset of value. to another entity through a written agreement.

Assignment rights happen every day in many different situations. A payee, like a utility or a merchant, assigns the right to collect payment from a written check to a bank. A merchant can assign the funds from a line of credit to a manufacturing third party that makes a product that the merchant will eventually sell. A trademark owner can transfer, sell, or give another person interest in the trademark or logo. A homeowner who sells their house assigns the deed to the new buyer.

To be effective, an assignment must involve parties with legal capacity, consideration, consent, and legality of the object.

A wage assignment is a forced payment of an obligation by automatic withholding from an employee’s pay. Courts issue wage assignments for people late with child or spousal support, taxes, loans, or other obligations. Money is automatically subtracted from a worker's paycheck without consent if they have a history of nonpayment. For example, a person delinquent on $100 monthly loan payments has a wage assignment deducting the money from their paycheck and sent to the lender. Wage assignments are helpful in paying back long-term debts.

Another instance can be found in a mortgage assignment. This is where a mortgage deed gives a lender interest in a mortgaged property in return for payments received. Lenders often sell mortgages to third parties, such as other lenders. A mortgage assignment document clarifies the assignment of contract and instructs the borrower in making future mortgage payments, and potentially modifies the mortgage terms.

A final example involves a lease assignment. This benefits a relocating tenant wanting to end a lease early or a landlord looking for rent payments to pay creditors. Once the new tenant signs the lease, taking over responsibility for rent payments and other obligations, the previous tenant is released from those responsibilities. In a separate lease assignment, a landlord agrees to pay a creditor through an assignment of rent due under rental property leases. The agreement is used to pay a mortgage lender if the landlord defaults on the loan or files for bankruptcy . Any rental income would then be paid directly to the lender.

Options Assignment

Options can be assigned when a buyer decides to exercise their right to buy (or sell) stock at a particular strike price . The corresponding seller of the option is not determined when a buyer opens an option trade, but only at the time that an option holder decides to exercise their right to buy stock. So an option seller with open positions is matched with the exercising buyer via automated lottery. The randomly selected seller is then assigned to fulfill the buyer's rights. This is known as an option assignment.

Once assigned, the writer (seller) of the option will have the obligation to sell (if a call option ) or buy (if a put option ) the designated number of shares of stock at the agreed-upon price (the strike price). For instance, if the writer sold calls they would be obligated to sell the stock, and the process is often referred to as having the stock called away . For puts, the buyer of the option sells stock (puts stock shares) to the writer in the form of a short-sold position.

Suppose a trader owns 100 call options on company ABC's stock with a strike price of $10 per share. The stock is now trading at $30 and ABC is due to pay a dividend shortly. As a result, the trader exercises the options early and receives 10,000 shares of ABC paid at $10. At the same time, the other side of the long call (the short call) is assigned the contract and must deliver the shares to the long.

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