Millennials Can Benefit from #Credit Education

As Millennials work to establish credit and build a foundation for future financial success, while managing debt, community financial institutions (FIs) can serve as a multi-faceted resource for this generation. Community FIs can provide the educational tools to teach Millennials about the importance of a strong credit score (and how to achieve this), as well as providing debt consolidation and money management education.

Although student loan debt routinely makes the news as being the most challenging debt factor facing Millennials, this demographic is no stranger to credit card debt as well.

In fact, new data from Experian indicates credit card debt surpasses student loans as the most common form of debt for Millennials. Thirty-eight percent of Millennials surveyed have credit card debt, followed by 36 percent with student loan debt. Other Millennial debt breaks down as follows:

  • Auto loans — 28 percent
  • Home loans — 20 percent
  • Personal loans — 17 percent
  • “Other” debt — 14 percent

The report, which polled 1,000 consumers between the ages of 19 and 34, also analyzed Millennials’ views on personal finance and their credit knowledge. Experian found a number of Millennials lack knowledge about credit or are apathetic about it, even though 75 percent said they’ve had a lending or leasing experience impacted — positively or negatively — by their credit scores.

What’s more, Millennials’ perceived credit scores and debt balances vary greatly from actual averages. Millennials surveyed estimated their demographic’s average credit score as 654, compared to the actual number of 625. Respondents estimated their average debt as $26,610, compared to the actual total nearly twice that amount — $52,210.

When it comes to feeling knowledgeable about their finances and confident in their financial futures, the results are mixed. While 73 percent of Millennials surveyed said they have a handle on their finances, 59 percent feel they are “going it alone.” Even more concerning, 57 percent said they believe the “odds are stacked against them.” Despite these concerns, 83 percent of respondents said they feel they can be debt free, and 71 percent feel confident about their financial futures.