One teaching strategy that I have used in the classroom to teach students about the importance of credit scores and credit reports is to create an activity where they act as credit underwriter.  In this role, they have three levers that they can play with in reviewing three applications:  approve/decline the application, set borrowing limits and set interest rates.  By giving them three levers, they see how lenders can control or mitigate risk on the less creditworthy applications.   Students are also asked to provide a rationale for their decisions.

This activity provides an excellent way to extend your lesson on credit cards and credit scores, demonstrates the importance of a good credit history and provides students with a new perspective on how credit decisions are made.

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.