Both Baby Boomers and Millennials Need to Fix Their Credit

Consumers of all ages may know that their credit can set them up for a lifetime of financial health and all the benefits that come with it.  However, two age groups, in particular, may need to be a little more rigorous about making sure they have good credit scores going forward.

Baby boomers, who are now between the ages of 50 and 65 and millennials, who can range anywhere from their late teens to early 30s, may be in the most dire need of credit repair.  However, the reasons for this necessary fix are rather different. The end goal, though, remains the same: making sure that credit health is such that it helps to keep those borrowers’ finances secure.

Why Boomers Might Need to Fix Credit

The final decade or so before a person aims to retire from their long career can be a vital time for finances overall; credit standing and debt alike often play critical roles in determining older workers’ financial futures. It is during this time that people are supposed to be making the final preparations for their retirements, putting a little more into savings vehicles, earning a larger salary overall and making sure to avoid any pitfalls that might endanger their incomes after they pull out of the workforce.

But the unfortunate reality, particularly these days, is that this simply isn’t feasible for many older workers.  Following the recent national recession, many older workers experienced significant financial difficulties. These often came through no fault of their own, but nonetheless had to be dealt with in some way. Whether it was prolonged bouts of unemployment that led workers to fall out of step with their retirement plans or an over-reliance on debt in their everyday lives, many boomers may have damaged their credit and other aspects of their finances both during and after the downturn.

As such, taking the time to do some credit repair will help older Americans to make the final preparations for their golden years. One of the easiest ways to do this is to get serious about cutting debt. Part of the reason for this is the fact that the amount of debt carried by a borrower at any one time versus the total limits on all accounts in his or her name makes up 30 percent of a credit score.  This means that larger debt loads both lower that rating and also make it more difficult to put money into savings. Therefore, taking the time to slash those obligations so that they require smaller monthly payments or eliminating them altogether, will likely be a boon. Not having to pay credit card debt can make retirement savings last longer and also give workers the ability to contribute larger amounts of money to the necessary accounts every month as a means of bolstering funds that may have been lost during and after the recession.

Why Credit Help is Often Necessary for Younger People

While older workers may need credit repair efforts to get their finances in line as they make the final push for retirement, their younger counterparts might need the help to get themselves off on the right foot.

It has been difficult in the last few years for millennials to find true financial independence for many of the same reasons that boomers suffered financial setbacks.  However, with the economy now improving, it’s possible that many of these young adults will be looking into major credit decisions, such as obtaining a mortgage or auto loan, relatively soon. Having a healthy score can not only improve their chances to qualify, but also the terms of the agreements they eventually sign up for, making that credit more affordable in general.

One of the most common issues that many young adults have encountered that may likely lower their credit standing is falling behind on student loan bills. Studies have shown that a massive amount of these accounts are in delinquency and even default nationwide; this is often because many students have had difficulties in obtaining full-time employment soon after graduation.  Payment history alone accounts for 35 percent of one’s score; even one missed deadline, let alone several, can take a huge chunk out of that rating. Taking the time to meet all credit obligations for a period of several months or more can put young borrowers back on the path to credit success.

Consumers of all ages should also strive to regularly order copies of their credit reports and ensure that there are no unfair markings on these documents. If any are discovered, it can be helpful to work with a credit repair company which may be able to correct the issues in relatively short order.

Posted in Credit Score
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