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Pre-Algebra Personal financial literacy

Credit reports and credit scores

20 practice questions 0 video lessons Theory + worked examples

Credit Reports and Credit Scores

Texas Pre-Algebra (TEKS) • Standard 6.14(F) • Financial Literacy

Credit Reports and Credit Scores is a topic in Financial Literacy in the Texas Essential Knowledge and Skills. It is aligned to Standard 6.14(F), which requires students to explain credit reports and the factors that affect credit scores.

A credit report records your borrowing history; a credit score rates creditworthiness, and paying on time raises it.

Texas Pre-Algebra (TEKS) › Financial Literacy › Credit Reports and Credit Scores  —  Standard 6.14(F)

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Theory

A credit report records your history of borrowing and repaying; a credit score (about \(300\)–\(850\)) rates your creditworthiness.

Paying on time and keeping balances low raise your score.
Credit score range A credit score summarizes creditworthiness, roughly 300 to 850. 300 580 670 850 poor good
The credit score range.
Credit reports & scores Credit reports & scores Credit reports & scores report: your borrowing history score: ~300–850 rating pay on time → higher score
Reports and scores.

Higher is better:

\[\text{on-time payments}\ \Rightarrow\ \text{higher score}\]
on-time payments lead to a higher credit score
A higher score earns lower interest rates.

How to build good credit

  1. Pay every bill on time.
  2. Keep credit balances low.
  3. Check your report for errors.
  4. Borrow only what you can repay.
Example 1 — What is a score
What does a credit score measure?
Solution

How reliably you repay debt.

how reliably you repay debt
Example 2 — Raise it
Name one way to raise a credit score.
Solution

Pay bills on time.

pay bills on time
Example 3 — Report
What is in a credit report?
Solution

Your history of loans and payments.

your borrowing history
Example 4 — Why it matters
Why does a higher score help?
Solution

It earns lower interest rates on loans.

lower interest rates

Common pitfalls

Late payments lower your score.
A report is history; a score is a rating.
A low score means higher borrowing costs.

Frequently asked questions

What is a credit score?

A rating of how reliably you repay debt.

What is a credit report?

A record of your borrowing history.

How do I raise my score?

Pay on time and keep balances low.

Why does a high score matter?

It earns lower interest rates.

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