A recent study conducted by the Consumer Federation of America and VantageScore Solutions found that 18-34 year-olds are far less informed than all other adult Americans on credit knowledge and understanding. Only 6% could accurately pick out the factors that actually impact a credit score, and less than half of all millennials have ever even bothered to order a copy of their free credit report.
Even more shocking, young adults have a pretty poor grasp on how far-reaching this impact is: Only 18% percent knew that utility companies, cell phone carriers, mortgage lenders home insurers, landlords and credit card companies can all use a consumer’s credit when doing business with them! (Insert shocked face emoticon here)
Combined with the fact this group is starting out with the highest percentage (and growing each year) of student loan debt, what does this mean for the future mortgage and housing industry?
Experts are concerned. Historically the housing industry has depended on young first-time homeowners. Tightening industry guidelines + increased consumer debt + ignorance credit score impact(s) = ? Some wonder if these millennials will ever be able to buy a home.
So what can we do? EDUCATE. Interestingly, people who got their credit reports annually knew more than those who had never looked at their credit report.
Every chance you get, talk to a millennial about simply checking their credit report. Chances are, once they take a look at what they look like to potential creditors, they will become more interested in understanding the facets of credit.
Provide credit and financial education guides to help understand the complexities of credit; the impact on delinquencies and high debt ratios on credit scores.
The good news is with a little time, patience, and education we will see the millennials as the foundation of our housing economy in the coming years.
Interesting Millennial Statistics:
- 36.8% of people under 35 own homes, down from 43% in 2006.
- 61.4% of people ages 35 to 44 are homeowners, down from nearly 69% in 2006.
- Just 9% of people ages 29 to 34 got mortgages in 2009 to 2011, compared with 17% a decade earlier, even before home prices inflated and mortgages became easy to get.
- 40% of those with student loans have put off making big purchases such as homes and cars.