MODULE 4 // FINANCIAL FOOTBALL PROGRAMFinancial Football is an interactive game designed to acquaint students with the personal financialmanagement issues they are beginning to face as young adults.It was developed with the philosophy that games can be powerful teaching tools. With most teens andyoung adults being familiar with some form of computer game, Financial Football engages students in afun, familiar activity, while educating them on topics essential to developing successful life skills.Financial Football features questions of varying difficulty throughout the game. Like football, successfulfinancial management requires strategy, finesse and endurance.The following curriculum is intended as a weeklong program. Before you play the game, we recommendreviewing and completing the four, 45-minute educational modules with your students to help them get ajump on the financial concepts the game covers.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 2

MODULE 4 // HOW CREDITWORTHY ARE YOU?Overview: In this lesson, students will gain an understanding of what credit is, how personalcreditworthiness is built and maintained, and how credit is protected.Age Level: 18 years oldTime Allotment: 45 minutesSubject: Economics, Math, Finance, Consumer Sciences, Life SkillsLearning Objectives: Understand what creditworthiness is Understand the three Cs of credit Understand when to use credit and when not to Learn how to spot and reverse the negative effects of identity theftMaterials: Facilitators may print and photocopy as handouts the quiz and written exercises at the backof this document. Students may use an online dictionary or search the web for commonly used financialterms. The Practical Money Skills web site has a glossary located nswer keys for all practice exercises are found on the last pages of this document.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 3

MODULE 4 // INSTRUCTION GUIDEIn football, as in other sports, statistics are used to measure how well individual football players perform,as well as where the team stands in the league’s rankings. Favorable numbers play a huge part in howthe football player does in his or her career, as well as whether the team eventually makes it to theplayoffs or Super Bowl.Once you start using credit, whether through credit cards, student loans or other forms of borrowing, youbegin building a credit history. Your credit history is a bit like a player’s statistics in football. By looking atyour past financial statistics, a bank or lender can evaluate and measure the likelihood that you’ll be ableto pay off debt if they decide to offer you a loan or credit card. In other words, your credit history, measuredusing past performance with money, determines what kind of credit risk you are.As young adults begin to build credit, it’s important for them to learn about creditworthiness and how itcan affect one’s financial future. Avoiding mistakes that damage your creditworthiness is vital, becauseonce damaged, you may find it a long and difficult process to restore your creditworthiness.Advantages of being creditworthy: You are more likely to secure favorable rates on loans and credit accounts. You may qualify for lower auto insurance rates. You will be able to open utility accounts for your apartment or house without paying large deposits.Challenges to you if you are not creditworthy: You will be charged higher loan and credit card interest rates. You may experience difficulty renting an apartment or buying a home. You may pay higher fees on credit accounts.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 4

MODULE 4 // DISCUSSIONEstablishing, maintaining and protecting creditWhen lenders consider your loan or credit card request, their main concern is: Can and will you pay backthe amount you borrow responsibly and on time? In other words, are you creditworthy? They use manytools and consider many factors to arrive at their decision.The Three “Cs” of credit are used to determine your creditworthiness. Should a lender approve yourcar loan or student loan? Should a service provider approve your cell phone contract? Should a landlordsign a lease with you? Are you a good job candidate?These decision-makers look at three main elements during their evaluation process: Character – how well you handle financial obligations. Capital – the assets you own, including real estate, savings and investments. Capacity – how much debt you can manage, based upon your income.CharacterCharacter is an evaluation of how likely you are to repay your debts. Potential lenders ask themselvescertain questions about your history, including: Have you used credit before? Do you pay your bills on time? Have you ever declared bankruptcy? Can you provide character references? How long have you lived at your present address? How long have you been at your present job?CapitalLenders often want to know if you have any assets you can use to secure the loan, in case you lose yourjob or default on a loan payment. What property do you own that can secure the loan? Do you have a savings account? Do you have investments to use as collateral?CapacityCapacity looks at how much debt you can handle based on your current financial situation. Lenderswant to know whether or not you have been working regularly in a job that will provide enough income tosupport your credit use. Do you have a steady job? What is your salary? How many other loan payments do you have? What are your current living expenses? What are your current debts? How many dependents do you have?FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 5

LESSON MODULE 4 // DISCUSSION (continued)How to increase your creditworthiness:Pay down your debts.Pay off your credit card balances in full every month. If you find yourself unable to do so, pay downyour debt as soon as possible. Creditors look at the gap between your balance and your credit limit.The more unused credit you have, the better your creditworthiness. Used wisely, credit cards help yourcreditworthiness.Spend less than you earn.Remember that lesson on budgeting? Having money in savings increases all three Cs above.Keep old accounts open.Credit card issuers and lenders often look at the length of your credit history. Keeping old credit cardaccounts open with a zero balance helps your credit history in two ways. First, it maintains the length ofyour credit history. Second, when you close an account, you lower the total amount of credit available toyou, which in turn raises the ratio of balances on your other loans and credit cards.Pay your bills on time.If you cannot pay your bills on time, call each of the companies before you pay late and explain yoursituation. Often, you can work out an arrangement that will allow you to pay what you are able to pay atthe time. And because you’re acting responsibly with your creditors, you won’t hurt your creditworthinessnearly as much as if you pay late or skip a payment.Avoid bankruptcy.Bankruptcy is a legal state granted by a court of law that declares you unable or impaired in your abilityto pay back your debts to your creditors. Bankruptcy is a last resort. Most bankruptcies can be avoided.Bankruptcies stay on your credit history for a very long time.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 6

LESSON MODULE 4 // DISCUSSION (continued)Protecting your personal information and accountsWhat is identity theft and what if it happens to you?Identity theft occurs when someone steals your personal information and uses it to get loans, creditcards, cell phone or utility services, or to open other accounts in your name.Identity thieves often rack up debt in your name, which has devastating effects on your credit history,and can cause you the loss of countless hours correcting the situation.If you’ve discovered that someone has stolen your identity: Contact the police immediately and file a report. Use this police report to begin disputing fraudulent charges and accounts with your bank,creditors and credit bureaus. Place a security freeze on your credit accounts before any new accounts can be opened inyour name and further damage your credit.Ways to prevent identity theft: Always keep track of your credit cards and credit card numbers. Carry a minimal number ofcards with you and store the rest, and your bills, in a secure place. Use the Internet to your advantage. Paying bills online will prevent physical, mailed bills fromsitting in your mailbox where someone could walk by and steal them.- If you need to mail a bill, drop it off at the post office. Shred all personal documents, including old bills, receipts, credit card and mortgage offers,and other documents that contain your personal information. When ordering products or services online, use only secure websites that have https:// in theirweb address and utilize Secure Socket Layer (SSL) and certificates to keep your transactionssafe from hackers. It’s also smart to print out your receipt or confirmation immediately after thetransaction to have a record of purchase. Beware of phishing schemes, which involve receiving emails pretending to be from legitimateorganizations that prompt you to visit phony websites. No legitimate bank or financial institutionwill EVER ask you to verify your account information in an email or ask you to click on a link inan email to go to a web site and enter or verify your account information. If you receive such anemail or text, you are the target of a “phishing” scam. The phishing goal is to obtain your financialinformation and use it for fraudulent purposes. Most banks and financial institutions have waysof identifying phishing schemes that are impersonating them. Check your bank’s web site fordetails.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 7

MODULE 4 // QUIZAnswer the following questions:1. True or false: Keeping older accounts open, even if they have a zero balance, can help your credit history.2. True or false: Having lots of debt on your credit card helps your creditworthiness.3. What is the very first thing you should do if your identity is stolen?4. True or false: Contacting lenders when you can’t make a payment is a good step toward protectingyour creditworthiness.5. True or false: A house is considered capital.6. True or false: If your creditworthiness is low, your credit card interest rates will also be low.7. True or false: Bankruptcy is the best way to handle your debts.8. True or false: All online shopping is safe.9. True or false: All emails that look like they’re from your bank and are asking you to verify your accountnumber are from your bank. It is quite normal for a bank to ask you for your account information.10. List the three “Cs” of credit, and define what each one means.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 8

MODULE 4 // WRITTEN EXERCISESImproving your credit score and debt levelYou have three credit cards: Credit card #1 Credit card #2 Credit card #3 500 credit limit 1,000 credit limit 2,500 credit limit 100 balance 950 balance 950 balance1. Even though the balances are all under the credit limits, which card’s balance should bereduced first to help your creditworthiness?2. What would the ideal balance on this card be?3. How much should you try to pay off?Protecting your credit rating and credit scoreYou receive a call from a telemarketer offering you a pre-approved credit card with a low interest rate.You don’t have any credit cards and want to start building your credit history.4. You should:A: Say “yes” and give them your financial information.B: Decline the offer and have them remove you from their calling and mailing lists.C: Take their offer, but negotiate a better introductory rate.You’ve gone to an electronics store to buy a new computer and applied for their store credit card. Youbelieve you’re in good credit standing, but you’re denied.5. You should:A: Obtain a copy of your credit report.B: Review your credit report to see your levels of credit and if they are too high.C: Review your credit report for any errors or fraud.D: All of the above.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 9

MODULE 4 // ADDITIONAL WRITTEN EXERCISEThis is an additional exercise to determine how much knowledge you’ve retained about creditworthiness.Scenario: A great apartment just became vacant in your best friend’s building. It’s cheap, has amazingcity views and is centrally located. However, the landlord is extremely picky about who she will acceptas a renter. She wants someone with great credit and references. You have a good chance of getting it.To strengthen your chances, write a letter to the landlord, using the creditworthiness information you’velearned in this module to reinforce what a good candidate you are.FINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 10

MODULE 4 // WRITTEN EXERCISE ANSWERSQuiz Answers:1. True 2. False 3. Contact the police 4. True 5. True 6. False 7. False 8. False 9. False10. Character – how well you handle financial obligations. Capacity – how much debt you can manage,based upon your income. Capital – the assets you own, including real estate, savings and investments.Written Exercise:1. Credit card #22. 1,000 x 30% 300 or less is the ideal balance.3. 950 - 300 650, which is the amount you should aim to pay on the balance as soon as yourbudget allows.4. B5. DFINANCIAL FOOTBALL // HALL OF FAME MODULE 4 // PAGE 11

Credit card #1 500 credit limit 100 balance Credit card #2 1,000 credit limit 950 balance Credit card #3 2,500 credit limit 950 balance 1. Even though the balances are all under the credit limits, which card’s balance should be reduced first to help your creditworthi