GYM Module 1 PDF - Grow Your Money - High School Finances

Grow Your Money A brief overview of budgeting, credit, and managing your finances for high school seniors. Module 1: Credit and Interest QUESTION B AN KS Credit De nitions Lesson 1 of 1 Module 1: Credit and Interest Welcome to Grow Your Money! This course will give you...

Grow Your Money A brief overview of budgeting, credit, and managing your finances for high school seniors. Module 1: Credit and Interest QUESTION B AN KS Credit De nitions Lesson 1 of 1 Module 1: Credit and Interest Welcome to Grow Your Money! This course will give you the basic tools you need to start your adult life in good financial standing. Remember, you'll get out of this course what you put in. Every piece of this course is designed to help you with your financial future. So, if you really put effort in to every module, project, and assignment, you will get much more out of this course. This first module, Credit and Interest, should take you 45 minutes to 1.5 hours, depending on how long you spend on each page. In it, we will cover: What credit, interest, and credit scores are What factors affect a credit score How to find your first credit card Types of credit scores How to look up your own credit score The importance of a good credit score in life 00:52 Audio transcript of this welcome page C O NT I NU E Defining Credit, Interest, and Credit Scores First, we need to go over some terms that will be used a lot in this course. Watch this short video to familiarize yourself with these terms:  00:13 Audio file of the Credit, Interest, and Credit Scores page. YOUTUBE What Is Credit? What Is Credit? A brief overview of credit, interest, and credit scores, geared towards high school seniors. VIEW ON YOUTUBE  C O NT I NU E Quiz Yourself See if you can define each term before clicking on it to reveal the definition: The ability to borrow money with the Credit understanding that you’ll pay it back later, usually with interest. The fee you pay for being able to Interest borrow money.  Gauge of how likely you are to pay your Credit Score loans back on time. 00:23 Audio file of the Quiz Yourself page. C O NT I NU E Types of Credit Scores There are two main types of credit scores, FICO and Vantage. Most lenders check your FICO score, rather than your Vantage score when deciding whether or not to lend you money or give you a credit card. Both FICO and Vantage use the three major credit bureaus to calculate scores: Equifax, Experian, and TransUnion. However, they each tend to give slightly different results because they are calculated in slightly different ways. Brandi Jones from the Kingdom RealtyTeam has put together a great short video to help understand FICO and Vantage credit scores, included below. 00:35 Audio file for theTypes of Credit Scores page YOUTUBE Demystifying Credit Scores Demystifying Credit Scores VIEW ON YOUTUBE   C O NT I NU E Factors That A ect FICO Credit Scores Click on the number next to each factor on the pie chart for more information. Starting with the number one and going in numerical order will take you through each factor in order if its importance to your credit score. 00:15 Audio file for the Factors That Affect Credit Scores page         New Credit 00:40 New Credit refers to how many accounts you've opened recently. Each time you apply for a loan or credit card, a lender inquires about your credit score, and a lot of inquiries in a short time will lower your score (checking your own credit report often, however, will not negatively impact your credit score). Closing accounts will also affect this category. Closing an account won’t remove the debt from your record, it will actually show up negatively on your credit report. To improve your credit score, space out your loans, leaving some time between getting a new card, a student loan, and a car loan.   Payment History 00:27 This means paying your bills on time, every month. You can go to the bank's website and set up an auto payment for the minimum amount due (usually $25 - $35) in order to never miss a payment. But, I always recommend paying the full amount every month to stay out of debt and keep your credit score up.   Credit Mix 00:15 Credit mix refers to having multiple types of credit accounts, like a credit card, student loans, and a car loan. While it’s good to have a mix, only get loans that you know you can pay off.   Credit History 00:20 This is the length of time you’ve been building credit. The best way to boost your score in this area is to get a credit card now to start building your credit history right out of high school. Check out the video link at the bottom of this section for a video on how to navigate finding your first credit card.   Credit Use 00:30 This is how much you use of your available credit. When determining your credit score, lenders look at something called a credit utilization ratio. Basically, it’s how much of your available credit you spend. Ideally, you should spend 30% or less of your credit limit. This means that if your card only allows you to spend up to $1000 a month, you should only spend $300 or less each month  C O NT I NU E Your First Credit Card Later, you will have an opportunity to check your own credit score. If you've never had any sort of loan or credit card, you won't have a credit score in the system to look up. In that case, your first step is to apply for your very first credit card. First, watch this video on how to decode the language that you'll come across when looking for your first credit card: YOUTUBE Decoding Credit Card Language A quick screencast on how to navigate finding your first credit card to start building credit. This work is licensed under a Creative Commons Attribution- NonCommercial-ShareAlike 4.0 International License.  VIEW ON YOUTUBE  Here are some other things to consider when looking for your first credit card: Look for a lower APR. This stands for Annual Percentage Rate, which is the percentage of interest that the bank will charge for any credit that you don’t pay back in full. Look for no annual fee. Some cards charge a yearly fee, and they could be worth paying if the card’s rewards are worth it. But, I would recommend finding a card with no annual fee for your first credit card. Look for good rewards. Some let you earn miles on flights for every dollar you spend, and some give greater rewards for groceries or gas. Find one that suits your lifestyle best. Consider getting a card through the bank that you already use. This will make managing your card and paying it online much easier. 01:07 Audio file for Your first Credit Card page C O NT I NU E The Importance of Managing Credit Cards Responsibly Before you get your first card, it's important to know what can happen if you don't pay your entire bill off every month. The interest, or APR, from that loan can add up and cost you a lot of money. It can also lower your credit score. Watch this video to learn more about how borrowing money on credit cards can cost you. STLOUISFED The Amazing $2,000 Pizza This video from the Continuing Feducation series emphasizes the importance of using credit cards responsibly. To provide students with online questions following each video, register your class through the Econ Lowdown Teacher Portal. Learn more about the Q&A Resources for Teachers and Students " Below is a full transcript of this video. READ MORE STLOUISFED  You are not required to get a credit card for this course, but I highly recommend you use this opportunity to apply for your first credit card and start building credit now. As long as you only spend what you know you can pay off on time every month, your credit score will start going up right away!  00:38 Audio file for The Importance of Managing Credit Cards Responsibly page C O NT I NU E Quiz Yourself See if you can define each term before clicking on it to reveal the definition: A card that requires a deposit, which Secured Card then becomes the limit that you can spend on that card. Annual Percentage Rate There's a lot to it  Annual Percentage Rate. There s a lot to it, but APR is essentially the percentage of the APR amount of money that you borrow (by not paying your bill in full) that the bank charges you for the loan. A yearly fee that some, but not all, Annual Fee credit cards charge. Named after its creator, the Fair Isaac Corporation, this credit score tends to be lower. It's the one that most lenders look FICO Score for when deciding whether or not to give a loan, and what the interest rate on the loan will be.  This credit score tends to be a little higher, Vantage Score and is easy to look up to help you keep track of your credit regularly. 01:32 Audio file for the Quiz Yourself page C O NT I NU E Checking Your Credit Score Once you have your first credit card or loan, check back in with this section so you know how to check your credit score. Your score will probably be low at this point in your life, as you start to build credit. Don't sweat it! You have plenty of time to build credit, and you're off to a great start by taking this course. AnnualCreditReport.com First, the U.S. Government requires that credit reports be available to citizens for free. The site that provides this service is: AnnualCreditReport.com. You'll be asked to enter your name, birthday, social security number, and address/s for the last two years. It will want the extra 4 digits attached to your address, which can be found easily on the US Postal Service website. Then, it will ask you some questions about previous addresses or employment to verify that it's you. You can request credit reports from each of the three major credit bureaus through his service. ANNUALCREDITREPORT Home Page During the COVID-19 pandemic, accessing your credit is important. That's why Equifax, Experian and TransUnion are continuing to offer free weekly online credit reports. Request your free credit reports Suspicious activity or accounts you don't recognize can be signs of identity theft. Review your credit reports to catch problems early. READ MORE ANNUALCREDITREPORT  MyFICO.com Next, there is a free service through FICO that offers a free Experian credit score. You have to pay to get the score from all three bureaus, which lenders will use to determine the loans and interest rates you will get. MYFICO Sign Up for myFICO FICO ® Score 8 is the version of the base FICO ® Score model most widely used by lenders. In addition to base FICO Scores, there are also industry-specific FICO Scores such as the FICO Auto Score and the FICO Bankcard Score. READ MORE MYFICO  Free Credit Report Services This article from Investopedia, outlines how some of the "free" credit report services will actually charge you hidden fees. They recommend some of the more reputable services, like creditsesame.com, and creditkarma.com. Also, they note that several major banks are offering free credit reports with their credit cards in order to entice customers. So, check with your bank to see if they already offer a free credit report with your card. INVESTOPEDIA Free Credit Score: How Free Is It Really? In today's banking environment, the decision to offer you a mortgage or grant you a credit card sometimes comes down to one simple thing: your credit score. Based on information in your credit report, this numerical rating provides an easy way to assess your risk of defaulting on a loan. READ MORE INVESTOPEDIA  01:37 Audio file for the Checking Your Credit Score page  C O NT I NU E 1 question drawn randomly from Credit Definitions C O NT I NU E Why Credit Is Important: A True Story Lastly, I wanted to leave you with an interview of someone who made some financial mistakes as a young adult, and was able to learn from them and thrive. I hope you find some of the advice useful, and that you find it helpful to know that everyone makes mistakes and there is always a chance to turn it around and find financial security in your life. SOUNDCLOUD Sandra Chervenak Finance Interview Podcast Share  Privacy policy Finance Interview Podcast by Sandra Chervenak An interview of someone who made some financial mistakes as a young adult, and has some lessons to share from that experience. Here is link to a transcript of the podcast: https://otter.ai/u/FQvHFrpCZRhfYNi8Dk62YOz1tlw?utm_source=copy_url VIEW ON SOUNDCLOUD  A transcript for the podcast can be found here: BODHIFINANCEPODCAST BodhiFinancePodcast Thu, Feb 23, 2023 11:50 PM; Duration: 20:22 READ MORE BODHIFINANCEPODCAST   00:27 Audio file for the Why Credit is Important: A True Story page. C O NT I NU E Congratulations! You've completed Module 1: Credit and Interest You've learned: What credit, interest, and credit scores are What factors affect a credit score How to find your first credit card Types of credit scores How to look up your own credit score The importance of a good credit score in life Continue on to Module 2 to learn about how to gain interest and save money for your future with IRAs.  This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. 00:40 Audio file for closing page CREATIVECOMMONS VIEW ON CREATIVECOMMONS  Credit Definitions Question 01/01 Now, test your knowledge of what you've learned so far. Drag the term on the left to meet its definition on the right: New credit The ability to borrow money Credit History Fee for borrowing money How likely it is that you will pay back a Credit Mix loan Payment History How many new recent loans Credit score How often you’ve paid your bill on time How many different types of loans you Interest have Credit How long you’ve been building credit Credit Use How much you spend of your credit limit