• lenny-learning-logoLenny Learning
  • Home
    Home
    • Lessons
    Lessons
  • Curriculum
    Curriculum
  • Surveys
    Surveys
  • Videos
    Videos
  • Support
    Support
  • Log In
lenny

Credit Starter Pack

user image

JOYCE PURCELL

Tier 1
For Schools

Lesson Plan

Credit Starter Pack

Students will identify two factors that influence a credit score and draft a 90-day starter plan including one product (e.g., secured card), an on-time payment automation, and a target utilization rate below 30%.

Understanding credit is crucial for future financial independence, from housing to loans. This lesson provides a foundational, low-risk approach to building a healthy credit history.

Audience

12th Grade

Time

30 minutes

Approach

Direct instruction, guided practice, and independent application.

Materials

  • Build Credit Safely Slides, - 90-Day Credit Starter Planner, - Score Factors Quick Guide, and - Exit Ticket: My Two Moves

Prep

Teacher Preparation

15 minutes

  • Review all generated materials: Credit Starter Pack Lesson Plan, Build Credit Safely Slides, 90-Day Credit Starter Planner, Score Factors Quick Guide, and Exit Ticket: My Two Moves.
  • Ensure projector/display is set up for the Build Credit Safely Slides.
  • Make copies of the 90-Day Credit Starter Planner and Exit Ticket: My Two Moves for each student.

Step 1

Warm Up & Introduction (5 minutes)

5 minutes

  • Begin with a quick poll: 'How many of you know what a credit score is? What do you think it's used for?'
  • Introduce the lesson objectives using Build Credit Safely Slides (Slide 1-2).

Step 2

Understanding Credit Score Factors (10 minutes)

10 minutes

  • Present key concepts of credit score factors using Build Credit Safely Slides (Slide 3-6).
  • Focus on payment history and credit utilization.
  • Distribute Score Factors Quick Guide for students to follow along and highlight key information.
  • Facilitate a brief Q&A to check for understanding.

Step 3

Building Credit Safely: The 90-Day Starter Plan (10 minutes)

10 minutes

  • Introduce the concept of a secured credit card as a safe starting point using Build Credit Safely Slides (Slide 7).
  • Explain the importance of on-time payments and automation (auto-pay).
  • Discuss target utilization rate (below 30%).
  • Distribute 90-Day Credit Starter Planner.
  • Guide students through drafting their own 90-day starter plan, including selecting a product, setting up auto-pay, and defining a utilization target.

Step 4

Partner Check & Wrap Up (5 minutes)

5 minutes

  • Have students briefly share their 90-day starter plans with a partner, offering feedback.
  • Distribute Exit Ticket: My Two Moves.
  • Students record two concrete actions they will take based on the lesson.
  • Collect exit tickets to assess understanding and commitment.
lenny

Slide Deck

Credit Starter Pack: Build Not Break

Understanding Your Financial Foundation

Learning Objective: By the end of this lesson, you will be able to identify two factors that influence a credit score and draft a 90-day starter plan including one product, an on-time payment automation, and a target utilization rate below 30%.

Ready to build your financial future?

Welcome students and introduce the lesson. Engage them with a question about credit scores to activate prior knowledge.

What's the Big Deal About Credit?

Why do we even talk about credit scores?

  • Buying a car?
  • Renting an apartment?
  • Getting a loan for college?
  • Even getting a job sometimes!

Your credit score is like your financial report card. Let's learn how to make it an A+!

Prompt students to share their initial thoughts on credit scores and their importance. This sets the stage for why this lesson matters.

Factor #1: Your Payment History

Think of it like showing up on time for a job. Consistently being on time (or early!) is key.

  • On-Time Payments: Paying your bills by the due date, every single time. (This is huge!)
  • Late Payments: Missing a payment can drop your score. The longer overdue, the worse.
  • Defaults/Collections: Really bad news for your credit.

The takeaway: Pay your bills, always on time!

Explain payment history as the most important factor. Use simple examples to illustrate good vs. bad payment habits. Emphasize consistency.

Factor #2: How Much You Use (Utilization)

Imagine you have a gas tank. You don't want to always run it on empty, but you also don't want to always run it completely full.

  • Credit Limit: The total amount of credit you have available.
  • Amount Used: How much of that credit you've borrowed.
  • Utilization Rate: Amount Used / Credit Limit (as a percentage).

Goal: Keep your utilization low – ideally below 30% of your total available credit. This shows lenders you're not overly reliant on borrowed money.

Introduce credit utilization. Explain what it means to use a percentage of available credit. Use a simple analogy like a gas tank.

Your 'Starter Pack' Product: Secured Credit Card

How do you build credit if no one will give you credit?

  • What it is: You put down a deposit (e.g., $200), and that becomes your credit limit.
  • How it works: You use the card like a regular credit card, but you can't spend more than your deposit.
  • Why it's great: It's low risk! You're using your own money as collateral, so banks are more willing to approve you. It reports to credit bureaus, building your history.

Introduce the secured credit card as a safe first step. Explain how it works and why it's a good choice for beginners.

Setting Up For Success: Automation & Targets

Building good habits is easier with a system!

  1. On-Time Payments: Set up auto-pay! Your bank can automatically pay your credit card bill each month.
  2. Target Utilization: Aim for under 30%.
    • If your limit is $200, try to keep your balance below $60.
    • Only use your card for small, planned purchases you can immediately pay off.

These two moves are powerful for a healthy credit score!

Emphasize setting up automation for payments and monitoring utilization. This is where practical application comes in.

Your 90-Day Credit Starter Planner

Now it's YOUR turn to create a plan!

Using your 90-Day Credit Starter Planner worksheet, you will:

  • Identify a low-risk credit product (like a secured card).
  • Plan for on-time payment automation.
  • Set a personal target utilization rate.

Transition to the 90-Day Planner. Explain that this is their chance to put the concepts into action.

Building Credit: It's a Marathon, Not a Sprint!

Start small, be consistent, and watch your financial future grow stronger.

Your Turn: On your Exit Ticket: My Two Moves, write down two concrete actions you will take or remember from today's lesson.

Conclude the lesson by reinforcing the main message and encouraging them to start building credit wisely. Introduce the exit ticket.

lenny

Worksheet

90-Day Credit Starter Planner

Name: ____________________________

Date: ____________________________

Part 1: My Credit Product Choice

  1. What type of credit product do you plan to start with? (e.g., Secured Credit Card, Authorized User on a family member's card, etc.)



  2. Why did you choose this product? What makes it a low-risk option for building credit?






Part 2: Setting Up for On-Time Payments

  1. How will you ensure your payments are always on time? (e.g., Auto-pay, calendar reminders, specific day of the week to pay bills).



  2. If you choose auto-pay, what steps will you take to set it up? (Think about bank accounts, card statements, etc.)






Part 3: Managing Credit Utilization

  1. What is your target credit utilization rate? (Remember, aim for below 30%.)



  2. If you have a secured card with a $200 limit, what is the maximum balance you would aim to keep each month to stay below your target utilization rate? (Show your math!)






  3. What types of purchases will you use your credit product for in the first 90 days? (Think small, manageable, and easy to pay off immediately.)









Part 4: My 90-Day Credit Building Commitment

  • Month 1: What is one specific action you will take this month to start building credit?



  • Month 2: What is one specific action you will take this month to continue building credit responsibly?



  • Month 3: What is one specific action you will take this month to maintain good credit habits?



lenny
lenny

Reading

Score Factors Quick Guide: What Impacts Your Credit?

Your credit score is a three-digit number that tells lenders how likely you are to pay back borrowed money. The higher your score, the more trustworthy you appear, which can lead to better interest rates on loans, easier approval for apartments, and even lower insurance premiums.

But what actually makes up that score? Here are the two biggest factors you need to know, especially when starting out.

1. Payment History (The BIGGEST Factor!)

What it is: This is simply whether you pay your bills on time. It's the most important part of your credit score, making up about 35% of your FICO score (the most common type of credit score).

Why it matters: Lenders want to see a consistent record of you paying back what you owe. If you've been reliable in the past, they assume you'll be reliable in the future.

Good Habits:

  • Always pay on time: Set reminders, use auto-pay, or mark your calendar.
  • Pay at least the minimum amount due: While paying in full is best, always make sure you hit the minimum.

Bad Habits to Avoid:

  • Late payments: Even one late payment can hurt your score, especially if it's more than 30 days overdue.
  • Defaults or collections: If a bill goes unpaid for a long time, the account might go to collections, severely damaging your credit.

2. Credit Utilization (How Much You Use)

What it is: This refers to the amount of credit you're currently using compared to your total available credit. It's often expressed as a percentage and makes up about 30% of your FICO score.

Why it matters: A high utilization rate can signal to lenders that you're relying too heavily on credit or might be in financial distress. A low utilization rate shows you can manage credit responsibly without maxing out your accounts.

How to Calculate:

  • Your Current Balance / Your Credit Limit = Credit Utilization Rate

    Example: If you have a credit card with a $500 limit and you currently owe $100, your utilization is $100 / $500 = 0.20 or 20%.

Good Habits:

  • Keep it low: Aim to keep your overall credit utilization below 30%. Many experts even recommend keeping it under 10% for the best scores.
  • Pay down balances: Try to pay off your credit card balance in full each month. If you can't, pay as much as you can to reduce the utilization.

Bad Habits to Avoid:

  • Maxing out cards: Using up your entire credit limit on one or more cards.
  • Carrying high balances: Consistently having large balances relative to your credit limits.

Starting Smart: Secured Credit Cards

For those new to credit, a secured credit card is an excellent way to start building a positive payment history and maintain low utilization. You put down a deposit (which becomes your credit limit), and then you use the card like any other. Since you're essentially borrowing against your own money, it's very low risk for both you and the bank, making it easier to get approved while still building a real credit history.

lenny
lenny

Cool Down

Exit Ticket: My Two Moves for Credit Success

Name: ____________________________

Date: ____________________________

Think about what we discussed today regarding building credit safely and responsibly. What are the two most important or impactful moves you will make or remember from this lesson to start building healthy credit?

Move 1:







Move 2:







lenny
lenny