Session 5: Credit History, Credit Reports, Identity Theft and Internet Scams

- Credit is based on a promise that you will pay it back. We went through a skit performed by two of the students where one girl keeps borrowing money from her friend, promising to pay her back the next day. Days pass and no money is returned. We discussed that when a friend breaks a promise you, the lender stop trusting that person, and as a result, might be less likely to lend money to that individual again. The moral of the story:

Aliya’s money situation was a bit tight when she bought those shoes. She didn’t have any money saved up at home to pay Jennifer back immediately. She needed to wait for her allowance first. By making a promise and then breaking it, Aliya lost Jennifer’s trust. Jennifer ended up telling some other friends how Aliya couldn’t pay her back. Her friends asked her if she would ever lend money to Aliya again. To which she replied, “probably not”.

- In personal finance, if you break the promise by missing a payment, the lender loses trust in you and tells the 3 credit bureaus (TransUnion, Experian, Equifax) who note it on your credit report.

- Your report is used to make a credit score (ask if they remember the range: 300 to 850). The better your credit history, the higher your score.

- Your score impacts whether future lenders what to lend you money, or if employers want to hire you, so it’s super important. Why? Because it’s a reflection of your character.

- Beware of identity theft and internet scams. Don’t carry your SSN on you; only buy online from reputable websites.

- Article: Newark man sentenced for numerous identity thefts

Teenagers are always engaged when I talk about Identity Theft. Unlike many topics in personal finance, this is one that applies directly to them. As the article demonstrated, Identity Theft can happen to kids, just like them. As a result we have to make sure that children are aware not to give their SSN to just anyone. It's a good habit to get used to asking why a SSN is being requested on a form. This was a topic that we encouraged them to their parents and guardians about when they got home.