Credit · HTML Lesson
What Is Credit?
An online lesson and video introducing students to the basics of credit — what it is, the types of credit available, how to obtain it, and why responsible use matters for long-term financial health. The lesson and video are free. An accompanying worksheet is available with Full Membership.
What Students Learn
Learning objectives
- What credit is — a financial arrangement that allows someone to borrow money with a promise to repay it, usually with interest
- The main types of credit: revolving credit (credit cards, lines of credit) and installment credit (car loans, mortgages, student loans)
- How to obtain credit — the application process, the role of credit scores, collateral, and cosigners
- Why using credit responsibly matters — paying on time, staying within limits, and avoiding unnecessary debt
- How maintaining a strong credit standing leads to better interest rates and better financial options over time
Video Lesson
Watch: What Is Credit?
For Teachers
How to use this lesson
Show the video as an introduction to credit, then use the discussion questions from the lesson page to deepen understanding. After the video, ask students to name the most important things they learned. The lesson page includes a full lesson plan with objectives and materials. An accompanying worksheet is available on the lesson page and requires Full Membership to access.
Best used as an opener for a credit unit — before lessons on credit scores, building credit, or credit cards. Also effective as a standalone session for younger high school students encountering credit concepts for the first time.
Lesson Plan
What is credit? — full lesson plan
Objective
Students will understand what credit is and how it works, identify the main types of credit, and explain why credit is important and why using it responsibly matters.
Key concepts
Credit is the ability to borrow money or obtain goods and services with the understanding that payment will be made later. If you have ever used a credit card, taken out a loan, or financed a purchase, you have used credit.
Revolving credit lets you borrow up to a set limit and repay the balance over time — a credit card is the most common example. Installment credit is borrowed for a specific purchase, such as a car or a home, and repaid over an agreed period with fixed payments.
How you get credit. You typically apply and provide information about your income, employment history, and credit score; lenders use this to decide whether to approve you and on what terms. If your credit history is limited or poor, a secured card or loan (backed by collateral) or a cosigner with good credit can improve your odds of approval.
Why credit matters. Access to credit makes it easier to reach financial goals — buying a home, leasing a car, or starting a business. Using it responsibly and paying bills on time maintains a good credit standing, which leads to better interest rates and terms and saves money over time.
Suggested procedure
- Introduction. Ask students what they already know about credit and why it might matter.
- Video. Watch the “What Is Credit?” video, pausing to clarify key concepts.
- Types of credit. Explain revolving and installment credit with examples; ask students for others.
- Worksheet. Students complete the worksheet, then review the answers together.
- Discussion & wrap-up. Discuss why credit is important and how to use it responsibly.
Materials needed
- The “What Is Credit?” video (above)
- The printable worksheet (below)
- Whiteboard and markers
The lesson content and video above are free to use. The printable worksheet below is available with Full Membership.
Printable Worksheet · Full Membership
What Is Credit? — Worksheet & Answer Key
A printable multiple-choice worksheet reviewing what credit is, the main types of credit, and responsible use — with an answer key for teacher use.
Related Topics
More credit and personal finance resources
Unlock the full Money Instructor library
Members get unlimited access to worksheets, lesson plans, and teacher resources across every financial literacy topic — budgeting, taxes, credit, banking, and more.