MM - Credit Reports Lesson [LESSON]

Credit Reports

In this lesson, we will explore a personal credit report and the impact of credit scores on business and personal life.

Knowledge Point

Before we dive into the lesson, take a few minutes to see if you can solve the following riddles, reveal the answer by clicking the riddle:

🧩 I am something you borrow, but must repay. I help you buy things when you don’t have the money to pay right away.
 - WHAT AM I❓

Credit 📇

 

🧩 I am a three-digit number that determines your creditworthiness. Banks and lenders use me to assess your reliability. 
 - WHAT AM I❓

Credit score 🔢

 

🧩 I am a report that shows your credit history. Lenders review me before approving your loan application.
 - WHAT AM I❓

Credit report 🧾

Credit Scores | Knowledge Point

Click through the tabs to view videos, a presentation, and an activity about credit scores.

Credit Score | Video

A credit score is a number that is used to represent how likely you are to pay back a loan, but how is this score calculated and why is it important? Watch the short video below to learn more about credit scores. Answer the questions below as you watch the video:

  1. How is a credit score calculated?
  2. What is the range of most credit scores?
  3. What does it mean for a credit score to be considered prime?
  4. Explain the impact of having a low credit score on loan applications.
  5. Describe the factors that contribute to a credit score.

OER Source: Red Canoe Credit Union “It's a Money Thing Links to an external site." Used according to terms of use.

 

Improving your credit score is essential for financial stability and achieving your goals. Below is an infographic with tips on how to help improve your credit score, take a moment to read through the information.

An infographic titled “THE ROAD TO FINANCIAL WELLNESS” provides tips to improve your credit score.

Credit Reports | Knowledge Point

Now that you understand credit scores, let’s take some time to explore credit reports.

What is a credit report❓

A credit report contains a listing of your finance history.  In the United States, the Fair Credit Reporting Act (FCRA) requires that everyone receive one free credit report each year from the three major credit bureaus: Equifax, Experian, and TransUnion. 📇

What information is included on your credit report❓

According to USA.gov, each credit report from the various credit bureaus contains slightly different information, but most reports contain:

  • Your personal information (name, address, date of birth, etc.)
  • Bill payment history
  • Record of loans
  • Current debt (amount that you owe)
  • Bankruptcy history
  • Lawsuit records

Experian Credit Report | Activity

In the activity below you will see what a credit report looks like. Click each information icon to learn about all the different parts of a credit report.

Who uses credit reports❓
  • Lenders might use your credit report to determine if you can get a loan and how much interest they will charge you
  • Insurance companies might use the information to determine the insurance rates you will pay
  • Utility companies might use your credit report to determine whether to provide services to you
  • Employers might view your credit report (if you provide permission) when making decisions regarding whether to hire you

Credit Reports | Self-Assessment

Read the questions in the self-assessment below and see if you can get the correct answer. Good luck!

Reflection

A credit report includes information about your financial history including your credit score. Your credit score is important because it affects your ability to get loans, credit cards, and other financial services or products. You should regularly review your credit report to ensure that information is accurately reported. If you find yourself in a situation in which you need to improve your credit score, remember that it will take some time, but there are some actions you can take to improve your score. 

[CC BY-NC-SA 4.0 Links to an external site.] UNLESS OTHERWISE NOTED | IMAGES: LICENSED AND USED ACCORDING TO TERMS OF SUBSCRIPTION - INTENDED ONLY FOR USE WITHIN LESSON.