Infographic: All You Need To Know About Credit Scores!
Hat tip to Laura Matchett of NGPF for pointing out this awesome infographic from Credit.org that explains the importance of having a good credit score by demonstrating how the cost of a home loan, auto loan, insurance and credit card interest rates varies based on these three digits. Just projecting this image on a screen (or maybe using as a handout because of the small print) could lead to a great discussion about credit scores:
Questions for your students:
- Create a headline that explains this infographic.
- Do you notice a consistent pattern when comparing the relationship between credit score and the factors listed on the infographic?
- Why do you think that lenders charge different interest rates based on credit scores? Does this make sense to you?
- Your friend asks for one piece of advice on how she can improve her credit score. What would you tell her?
- Why do you think insurance rates would be higher for those with poor credit?
- Assume that Tina has excellent credit, Jean has acceptable credit and Bart has poor credit.
- Calculate how much each of them will pay in interest for a home and auto loan.
- Compare Tina’s interest cost to Jean and Bart’s interest cost.
- What is the cost of having acceptable credit when compared to excellent credit?
- What is the cost of having poor credit when compared to excellent credit?
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Try this NGPF Activity: Calculating a FICO Score!
About the Author
Tim Ranzetta
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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