Lesson 5: All about Credit
Young Adult, Lesson 5
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Video: Do I really need to build my credit? Video: Building good credit Instructional Slides

Lesson 5: All about Credit

Learning Objective:

Students will be able to compare and contrast opinions and ideas about credit and begin to formulate their own opinions and ideas.

Pre-work:

East/West Activity (10 min)

Slide: East/west activity
Say: Besides getting a good job, what goals do you have for your life? And do you believe credit can help you achieve those goals—or can it stand in your way? 

Slide: What is credit, anyway?
Say: What is credit, anyway? In this context, credit is a contractual agreement between a borrower and a lender. The lender loans the borrower a sum of money or something valuable, and the borrower repays the lender later, usually with interest (which is additional money on top of the original amount).

The term “credit” may also refer to someone’s creditworthiness or credit history. For example, someone might say, “Do they have good credit?” This is a way of evaluating whether someone’s history suggests they’re willing and able to repay loans.

Say: Everyone please stand up. Based on what you know now, I want you to move to the east side of the room if you believe that credit is good. Stand on the west side if you think credit is evil. And stand in between if you’re not really sure or fall somewhere in the middle

If you’re teaching remotely, ask students to put a smiley emoji into the video chat if they believe credit is good; a frown emoji if they believe it’s evil; and a half-moon emoji (or similar) if they’re not really sure or fall somewhere in the middle.

Slide: Talk with your peers
Say: Talk with the people around you about your thoughts and feelings about credit. Consider how credit has shown up in your life so far and in the lives of people you know. Keep in mind that credit comes in a number of forms, including credit cards, car loans, mortgages (the loans people take out to buy a house or apartment), and more. For example, sometimes credit is extended when people go to the doctor or hospital—meaning they don’t have to pay upfront and get billed later. 

For remote teaching, create 3-minute breakout rooms for each group. Afterward, ask one person from each group to share what their group talked about.

Say: Ok, you can sit down.

Credit Discovery (20 min)

Slide: Credit discovery, video #1
Say: We’re going to watch two videos together and talk about each. Then you’re going to do some independent research on credit. It’s important to have an informed opinion, so let’s consider a number of perspectives.

Share the Dave Ramsey video, which is anti-credit (~3:30 mins): https://www.youtube.com/watch?v=p9WoMpKW6LE

Ask: What are your thoughts about this video? Has your view about credit changed a bit? 

Slide: Credit discovery, video #2
Share the Financial Wellness by RISE video, which is more neutral about credit (~4:20 mins): https://www.youtube.com/watch?v=eQ8_NKh4C08 

Say: What are your thoughts about this video? Has your view about credit changed?

Slide: Research credit on your own
Say: Now, take about 10 minutes to research credit on your own. You might start by re-watching parts of the 2nd video and taking notes, just so you can get familiar with some of the basic terms and ideas. https://www.youtube.com/watch?v=eQ8_NKh4C08 

To find other informative videos, articles, or sites, you might search for something like, “Is credit good or bad?”  

As you delve into this, keep in mind that a lot of people are pretty opinionated about credit because it’s affected them and the people they know in profound ways. And as you’re searching, think about your sources: when you’re on a website for a bank or credit union, do you think it’s going to be against credit? Those institutions want to make money—and they make it through the interest they earn from giving people loans (which is essentially the same as providing credit). Note that “interest” can be thought of as additional money; it’s usually a percentage of the original amount. 

So be aware of your sources and whether they’re biased in one way or another. If you can, find sources that end in .gov, .edu, or .org—generally speaking, those are likely to be more reliable.

Have students write down at least 3 interesting facts or opinions they read or heard about credit.

Discussion (10 min)

Slide: Credit discussion
What did you discover? Let’s make a collective list of the pros, cons, and neutral information we’ve gathered about credit. And if you hear someone state something as a fact when you believe it to be more of an opinion, you may silently stand up and be prepared to refute it with information you’ve found. (But you only get to do this once during our 10 minute discussion, so listen carefully and choose wisely!)

If you’re teaching remotely, tell students they can use the video chat tools to raise their hand and dispute a “fact” that they believe to be an opinion.

Reflection (5 min)

Slide: Credit and you
Log into Stash101, where you’ll be on the Overview page. Scroll down to Bills and then Transaction History. How much of your monthly budget is allocated toward credit, including loans? And based on what you know now, how comfortable would you be buying things on credit/taking out loans in real life? Why? 

Call on 2-3 students.

Slide: Reflection
What happens if there’s something you need money for—like your own car, for example—but too much of your monthly budget is going toward credit card bills and other debt? How might getting in debt affect your ability to make choices about where you want to go, what you want to do, and who you want to become?

Call on 2-3 students.

Display Takeaway slide.