Credit Scores: What They Are and Who Uses Them
Aligned to JS:CD-2 — Jump$tart National Standards in K-12 Personal Finance Education & Advance CTE Career Clusters.
What this lesson teaches
A credit score is a number, roughly 300 to 850, that summarizes how reliably you have repaid borrowed money. Lenders use it to decide whether to lend and at what rate. Landlords, insurers and some employers look at credit too, so it reaches further than loans.
Worked examples
Example 1
Paying every bill on time is the single largest factor. One payment 30 days late can drop a good score by dozens of points and stays on the report for years.
Example 2
On a $20,000 car loan, a strong score might get 6% and a weak one 16% — a difference of about $5,800 over five years for the identical car.
Example 3
Using a small share of your available credit helps. Carrying $900 on a $1,000 limit looks worse than carrying $900 on a $5,000 limit.
Practice questions
- Name three things that affect a credit score.
- Explain how a low score costs money even though it is not a bill.
- Why do landlords care about a credit score?
Watch the lesson
Every lesson comes with a video taught in English and Spanish — the same video the QR code in the printed workbook opens.
▶ Watch this lessonEn español
El puntaje de crédito: qué es y quién lo usa
Un puntaje de crédito es un número, más o menos de 300 a 850, que resume qué tan confiablemente has pagado dinero prestado. Los prestamistas lo usan para decidir si te prestan y a qué tasa. Los arrendadores, las aseguradoras y algunos empleadores también lo revisan, así que alcanza más allá de los préstamos.
Ejemplo 1: Pagar cada cuenta a tiempo es el factor más grande. Un pago con 30 días de atraso puede bajar decenas de puntos y queda en el reporte por años.
Ejemplo 2: En un préstamo de auto de $20,000, un buen puntaje podría conseguir 6% y uno malo 16% — una diferencia de unos $5,800 en cinco años por el mismo coche.
Ejemplo 3: Usar una parte pequeña de tu crédito disponible ayuda. Deber $900 de un límite de $1,000 se ve peor que deber $900 de un límite de $5,000.
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