💳 UNIT 5 • 4 WEEKS

Credit & Debt Management

Build excellent credit, understand debt, and avoid financial traps

📊 Understanding Credit Scores

Your credit score is a 3-digit number (300-850) that represents your creditworthiness. It affects your ability to rent apartments, buy cars, get loans, and even secure jobs.

Credit Score Ranges

300-579
Poor
580-669
Fair
670-739
Good
740-799
Very Good
800-850
Excellent

What Affects Your Credit Score

  • Payment History (35%): Pay all bills on time, every time
  • Credit Utilization (30%): Keep balances below 30% of credit limits
  • Length of Credit History (15%): Keep old accounts open
  • New Credit (10%): Don't open too many accounts at once
  • Credit Mix (10%): Have different types of credit (cards, loans)

💳 Credit Cards: Use Them Wisely

Credit Card Best Practices

  • Pay in Full Every Month: Avoid interest charges completely
  • Never Miss a Payment: Set up automatic minimum payments
  • Keep Utilization Low: Use less than 30% of your credit limit
  • Read the Fine Print: Know your APR, fees, and rewards
  • Protect Your Information: Guard against fraud and identity theft

⚠️ Credit Card Traps to Avoid

  • Carrying a balance and paying high interest (15-25% APR typical)
  • Making only minimum payments (takes years to pay off)
  • Using credit cards for things you can't afford
  • Falling for "buy now, pay later" with high interest
  • Getting store cards with limited value and high rates

🧮 Debt Payoff Calculator

Calculate Your Debt Payoff Plan

See how long it will take to pay off your debt and how much interest you'll pay:

🎯 Debt Payoff Strategies

Snowball Method

Pay minimums on all debts, but put extra money toward the smallest debt first. When it's paid off, roll that payment to the next smallest. This builds momentum and motivation.

Avalanche Method

Pay minimums on all debts, but put extra money toward the debt with the highest interest rate first. This saves the most money on interest long-term.

✅ Building Credit Action Plan