What Millennials Should Know About Credit

Millennials Credit Knowledge

By: Alayna Pehrson – Digital Marketing Strategist for Best Company

Millennials are often faced with many challenges and decisions early on in life that previous generations have never experienced. Things like social media repercussions, a higher amount of competition in education and professional careers, an increase in mental health challenges, and cost of living increases that often lead to debt. With this list of rising issues and more, it’s no wonder why millennials strive to find ways to avoid financial distress. However, this avoidance has led many millennials away from using credit cards.

The idea that having a credit card means accumulating uncontrollable debt is a myth, but there is a reason why millennials may think this way. According to Bank Rate data, only 33 percent of millennials between the ages of 18 and 29 own credit cards. The data also shows that those who own the most credit cards are in the 65+ age range. Many millennials have grown up with parents who use multiple credit cards. Since the 2008 financial crisis (a formative time for many now young adults) have left the millennial population scared of credit card debt, according to a NY Times article. Although millennials think that avoiding credit cards is a good way to stay away from debt build up, there are many things about credit that they should know before choosing the non-credit card route.

What Good Credit Can Accomplish

Although credit card debt can be frightening to deal with, it is important for millennials to understand that credit is designed to make life better, not worse, for credit card users. Some positive effects of credit is that it makes it easier for people to obtain housing, cars, rewards, other cards, loans, financial responsibility, and more. The earlier millennials start establishing and building credit, the sooner they can enjoy the luxuries of having good credit; and there are many ways to begin the credit process at a younger age.

How Credit Cards Affect the Economy

According to Market Realist, credit is very important to the U.S. economy. More credit card usage means that there is an increase in spending. This increased spending leads to higher income levels within the economy which ultimately results in faster productivity. This cycle is how the economy functions and grows. Therefore, the lack of millennial credit card usage will, in the end, negatively affect the economy. For millennials to help the economy and themselves when it comes to credit, they have to accept a certain level of responsibility. Those who use cards must be aware that credit cards have a history of making people spend more money. However, those who use credit cards wisely will be able to avoid the overspending and reap the benefits of credit.

How to Use Credit Cards Responsibly

When people treat credit cards like debit cards, pay their bills on time, and are fully aware of their reports and scores, they will ultimately have an easier time avoiding financial downfalls. It’s important for millennials to know that having good or bad credit depends on how they use the card and what they know about credit. Financial responsibility is more than just swiping a credit card. It involves things like keeping track of spending and budgeting, knowing how to fix debt, understanding how credit works, being aware of what is owed and when it is due, knowing how different things affect their credit history, etc. It is recommended that millennials do research on how to develop financial responsibility, specifically good credit habits before they begin to use a credit card to ensure that they won’t run into debt.

How to Repair Credit Scores

Another circumstance that millennials should be familiar with before they begin their journey with credit is that if they do slip up, there are ways to repair credit scores. If the problem rests with late payments, a way to better a credit score would be to make sure that payments are on time, every time. Setting reminders and notifications are really the main way to solve this problem. This option takes time, which means making large purchases might have to wait a while.

A less time consuming method for credit repair involves the help of a credit repair company. Credit repair companies and services can eliminate negative items on a credit report which can greatly increase the score. They focus on providing card users with a quick and relatively painless credit repair process. This shows millennials that even if bad credit occurs, there are ways for it to be fixed.

Overall, diminishing the fear and myths of credit cards in the eyes of millennials will, in return, create a more financially promising future for not only the economy, but also for millennials themselves.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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