Millennials don’t understand how to build credit, study says

[Mindark]

Utilization has no memory, so there is basically no damage to your score if you max a card and then pay it off. Speaking of not understanding credit...

This is mostly true. You want to keep your credit under a certain threshold, generally 30% of your credit limit. There is no knowing when you will be polled. It is these polls where your utilization does have memory. If you max your card, you'd want to pay it off immediately. Waiting for your statement, despite not accruing any interest on it, is risky for this reason. Now people can understand credit a little better instead of being shamed for not.

[Deleted]

Baseless and dumb study. The problem is that :

a. Credit scores in the USA is a dated system and it doesn't even work accurately either.
b. Millennials are exploited in the USA when it comes to the amount of pay they receive for the work they do.

In my country we have a simply system you are on a whitelist or a blacklist (there's no in between or degrees of how good/bad your credit is).

a. Whitelist : Steady employment, no excessive accumulation of debt with one or multiple banks, good track record with payments.
b. Blacklist : On and off employment, excessive accumulation of debt with one or multiple banks, bad track record with payments.

- Our system works very well in comparison to any other European, American or Asian system.
- Our system is fair, and is really aimed at preventing people going into poverty or losing their properties, government protection ftw.
- Currently rated at 550k EUR per household (double of Western Average) in wealth (83% of all citizens owns a house)

- Currently rated at 35k EUR in debt per household (Includes all debt, personal debt is around 8.7k (2016))(Half of Western Average).

--

Strict systems are good but they need to be humane, it's the general problem in the USA, the systems aren't really made for people who are starting up, in our country the government really monitors everything to make sure the weak and the weakest always get the required help they need... to get back up on their feet. Because like any smart government, they know the worse a citizen's debt becomes, the more the government will have to 'invest' in order to neutralize that debt.

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Why use credit when you can use a check or cash? Don’t get me wrong good credit will help you out a lot and having a credit card with cash back makes life way easier but I fail to see the need for it outside of commodity needs. If you don’t have the money in the first place a credit card will not make the purchase any easier when you have to pay interest back. Then you find yourself in debt and have to go through hoops to pay it all back.

Here's the thing though, why spend for more than you can afford. A credit card isn't expensive if you don't go over your limits and you pay it off monthly. It only becomes expensive because you simply spent more than you can afford and you cannot pay it off within a month, and then it snowballs out of control.

A lot of the American debt is caused simply by people thinking they can afford it, but they can't, then there's the problem that you can get into big debt with multiple banks and still get credit cards from other banks. In my country they have a central database, if they see outstanding debt with one bank, every other bank will deny you unless you got a settlement from the government where they vouch for you, or you are simply restructuring your debts.

[Aitch]

Make generalizations about a group. List statistics that suggest far less than 50% of the group fall within the generalizations. Journalism.

[Antiganon]

Make generalizations about a group. List statistics that suggest far less than 50% of the group fall within the generalizations. Journalism.

I mean, its USA Today, that's journalism in the same sense that Breaking Bad is a chemistry lesson.

[Deleted]

Uhm... The study itself indicates that a good three quarters of them actually have a fairly decent knowledge on how credit score actually works.

[Darkeon]

Millennials know less about life than older generations, study says.

[Eon Drache]

Soo based on the age distrubution in America about 50% of the population doesn't understand a vital part of society. Sounds kind of like an eductional problem. It could be more than that considering we didn't get whether older generations understand it.

[Nalnik]

0 is an established credit score. Not having an established credit score means you just don't have a credit score. For what it's worth, 300 is the lowest you can be.

Chiming in on the 0 Credit Score, it seems to be what they say when you don't have "enough" lines of credit, according to Wells Fargo, Experian, and several local mortgage companies (which is a complete load to me).

I had only 1 credit card (~10 years old), 1 bank account [checking/debit only] (~5 years old), and lived with friends/family, paying them monthly, so no rent/mortgage in my name, with a paid off car. Everyone told me I had a credit score of 0 as well. About the 3rd or 4th mortgage guy actually told me the above, which everyone else seemed to jump onto a bandwagon to confirm when I asked directly. So, opened a second credit card, and after three months, that 0 magically turned into a mid-700 score.

[Micronetic]

You should change the topic's name to United States Millennials. I don't even know 1 person in my circle of friends and/or family who even has a credit card (Europe pleb here).

[Logwyn]

I want to buy a small condo for $200k, will you loan me money? I'll pay you back.

Then we should ask.... if there wasn't loans or credit how much would that house really cost?

[Aquinan]

To be fair te whole credit rating system is a load of garbage, and only serves to line the pockets of big banks.

[downnola]

To be fair te whole credit rating system is a load of garbage, and only serves to line the pockets of big banks.

Why would anyone loan money if they didn't stand to gain from it? Is this a serious argument, or am I a victim of Poe's law?

[DrStiglit]

My point exactly if you haven't worked for it you don't deserve it.
Now keep on trying to convince me credit is good i want to hear more when you float in debt's you cannot pay because you get laid off of work or you don't make enough to pay your loans.

A mortgage on a $200K condo will be cheaper than renting. You will also have tax benefits from owning and be building equity. Also, homes often times appreciate in value. So by getting a loan to purchase a home instead of renting you are SAVING yourself thousands while also BUILDING wealth through homes value.

And if you get laid off you aren't going to be homeless either way. At least with a mortgage you can ride it out a lot longer without paying than you can when you're renting. Banks will often work with you a lot easier than a landlord because it's better for them to be getting something out of the owner than having to go through foreclosure and re-sell the home. Owning that small $200K condo is far more beneficial than renting while saving.

[Aquinan]

Why would anyone loan money if they didn't stand to gain from it? Is this a serious argument, or am I a victim of Poe's law?

I didn't say charging interest was bad, I said the credit rating system is stupid.

[Tinykong]

This is mostly true. You want to keep your credit under a certain threshold, generally 30% of your credit limit. There is no knowing when you will be polled. It is these polls where your utilization does have memory. If you max your card, you'd want to pay it off immediately. Waiting for your statement, despite not accruing any interest on it, is risky for this reason. Now people can understand credit a little better instead of being shamed for not.

Utilization has no memory. If you max all of your available credit to 100%, your score will return to previous levels as soon as you pay it off.

You shouldn't get an unexpected credit pull (I'm assuming that is what you are referring to) because you should know when and who is offering to extend you credit.

[Deleted]

Millennials know less about life than older generations, study says.

Older generations have a higher death rate than millennials, study says. or Millennials have a very low participation rate in WW2, study says.

Really have to figure out what generation is the best and worst - I mean the generation who had Hitler is the worst and Einstein's is very good so we have a lot of things to look into.

[Lochton]

Uhm, this was a problem even before the millennials were to be a thing. Everyone is talking about their purchased houses etc etc but fail to realize that the market today can't even be compared to back then. In the end, loans and credits are the saddening future for many to be able to have a chance for anything.

[TITAN308]

Instead of being taught how to gain credit scores, people should be taught how to avoid being slaves of banks and to stop using credit cards and stop taking on unnecessarily loans.

First Post Nails It

/Thread

[melodramocracy]

Yet another article that doesnt need 'millenial' as a qualifier.

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Why do any one need to be able to have credit?

Why is that even a thing.
Americans are stupid Jesus Christ.

Because western capitalism collapses without interest payments.

[Spectral]

The reality is that a “high credit utilization rate” (translation: you use a credit card a lot)...

That's not what credit utilization is. It's pretty hard to take an article seriously when they can't bother to get the basics right.