Nearly Half of Millennials Say Their Credit is Holding Them Back
For many people, their 20s can be a rocky time for their finances. In fact, according to a TransUnion study, 43% of Millennials have subprime credit scores. As a result, it seems that nearly half of those in their 20s and early 30s are facing subsequent financial hardships.
A new survey conducted by OppLoans found 46% of Millennials attesting that their low credit score was holding them back. Topping the list of ways their credit was holding them back, 27% of respondents said it affected their ability to buy a car. Not far behind, 26% bemoaned their inability to get a loan, while 23% reported having trouble obtaining a credit card. Also of note is that a quarter of those surveyed said their credit had negatively impacted their ability to rent an apartment or buy a house with a separate 14% explaining that they lived with roommates due to this dilemma.
What’s unfortunate about this study’s findings is that many Millennials are currently at an age where they should be achieving certain “money milestones” that are unattainable due to their credit. OppLoans CEO Jared Kaplan elaborated on this issue, noting, “A low credit score can cause serious problems long before the common milestone of applying for a home mortgage. For a significant portion of millennials, the things that most people do in their 20s – rent an apartment, buy a car, get a credit card – are tough because of bad credit.” However Kaplan also offered some tips for those struggling, saying “There are many easy ways that young people can avoid hurting their credit. For instance, our survey found that 36% of millennials who missed a credit card payment simply forgot about it. Almost all credit card companies allow customers to set up automatic payment plans, and these can be programmed to cover only the minimum amount due if someone’s on a tight budget. This is an everyday hack that can help millennials avoid credit damage and late fees.” However, to that point our own Millennial correspondent Kyle recently shared some of the downsides of such autopay options.
While Kaplan’s autopay tip may be beneficial to some, there are also several other ways Millennials and those of any age can help improve their credit. For one, sites like Credit Sesame allow users to check their credit score for free and also see where the can make improvements. As for making on-time payments, apps like Mint and Clarity Money enable consumers to set reminders about their bills, as do several credit card issuers. Finally, as NerdWallet reports, there are now several services that may allow renters to have their on-time rent payments reported to various credit bureaus, which in turn could help them raise their scores.
Although your 20s may be the time to experiment and explore, the truth is that doing damage to your credit at a young age can have lasting effects you might not have previously considered. With that, hopefully the other 54% 0f Millennials and those in Gen Z can learn from the mistakes of their peers and avoid some of their credit pitfalls.