What Credit Is — slides
Financial Literacy Club
Credit & Debt · Lesson 1
What Credit Is
Borrowing now, paying later — and why lenders care about trust.
10-minute lesson · learnwithflc.org
What Credit Is · 1 / 20
Financial Literacy Club
Credit & Debt · Lesson 1
What Credit Is
Borrowing now, paying later — and why lenders care about trust.
10-minute lesson · learnwithflc.org
Today's goals
By the end of class, you'll be able to…
- Define credit and explain why lenders charge interest
- Name the three credit bureaus and describe what a credit report contains
- Explain how to check your credit reports for free
Warm-up
A friend asks to borrow $50 and promises to pay you back next month. What would make you say yes? What would make you say no?
Think, then write your answer.
The big idea
What Credit Is
Borrowing now, paying later — and why lenders care about trust.
Credit & Debt · Lesson 1
Credit means borrowing money now and promising to pay it back later. A lender — a bank, a card company, a car dealer — lets you buy something today because it trusts you'll repay.
Credit & Debt · Lesson 1
Borrowing almost always costs something. You usually pay interest, and sometimes fees. That's the price of using someone else's money.
Vocabulary
Credit history
The record of how you've handled borrowed money: what you borrowed, whether you paid on time, and how much you owe now.
Credit & Debt · Lesson 1
Three nationwide credit bureaus — Equifax, Experian, and TransUnion — collect that history into credit reports. Lenders check them. So do many landlords, and in many states, insurance companies and utility or phone providers.
Credit & Debt · Lesson 1
You can see your own reports for free at AnnualCreditReport.com, the official site, as often as once a week. Checking your own report never hurts your credit.
Credit & Debt · Lesson 1
Starting from zero is normal
Most people can't get their own credit card until 18, and under 21 you generally need your own income or a co-signer. So many students have no credit history at all. That isn't bad credit — it's just a blank page.
See it
You borrow, you pay on time, your history grows, and over time you qualify for better terms like lower interest rates and smaller deposits.
Borrow
A card, loan, or line of credit
Pay on time
Every bill, every month
History grows
Reported to the credit bureaus
Better terms
Lower rates, easier approvals
Real example
Two apartment applications
Kim and Dev, both 19, apply for the same apartment. The landlord checks their credit.
- Kim has had a student credit card for a year. She uses it for gas and pays the full balance every month. The landlord approves her with the standard deposit.
- Dev has never borrowed. His report is empty. The landlord asks for a co-signer or a larger deposit.
Dev didn't do anything wrong — there's just no record to show the landlord he pays reliably. Building a little history early, carefully, makes the next steps easier.
Activity · small groups · 10 min
The Landlord's Decision
- Groups play a landlord reviewing three fictional applicants. Applicant 1: two years of on-time payments and low card balances. Applicant 2: no credit history at all. Applicant 3: several late payments and one account in collections.
- Groups rank the applicants and choose a decision for each: approve, approve with a larger deposit or co-signer, or deny.
- Each group explains its decision for Applicant 2.
- Debrief: no history is not bad history — it's a blank page.
Check for understanding · 1 of 3
You buy a $300 bike with a credit card, then pay the card bill in full when it's due.
What actually happened?
- AThe money came straight out of your checking account.
- BThe card company paid for the bike, and you repaid it — borrowing that adds to your credit history.
- CYou took out an installment loan.
- DThe bike was free because you paid on time.
B. The card company paid for the bike, and you repaid it — borrowing that adds to your credit history.
A credit card is a loan. The issuer paid the store, and you repaid the issuer. Paying on time is exactly the kind of history lenders want to see.
Check for understanding · 2 of 3
Checking your own credit report lowers your credit score.
- True
- False
False
Looking at your own report is a "soft" check and never affects your score. You can check it free at AnnualCreditReport.com.
Check for understanding · 3 of 3
A landlord runs a credit check on an apartment applicant.
What will the credit report most likely show?
- AThe applicant's grades and school attendance
- BHow much is in their savings account
- CTheir salary
- DTheir loans and cards, and whether they've paid on time
D. Their loans and cards, and whether they've paid on time
Credit reports track borrowing: accounts, balances, and payment history. They don't include bank balances, income, or grades.
Remember
Key takeaways
- Credit = borrow now, repay later, usually with interest.
- Your credit history lives in reports from Equifax, Experian, and TransUnion.
- Check your reports free at AnnualCreditReport.com — it doesn't hurt your score.
- No history isn't bad history. It's a blank page to build carefully.
Discuss
Talk it over
- Why would a landlord care how someone has handled credit cards?
- Is it fair that people with no credit history can pay more for some things? What could change that?
Exit ticket
Fill in the blanks: Credit means you ___ now and ___ later, usually with ___.
Answer on your exit ticket before you leave.
Nice work today.
Review this lesson anytime — free, no account needed:
learnwithflc.org/courses/credit-and-debt/what-credit-is
Next up: finish your worksheet.