What generation has the best credit score?
USA Today recently published a story about what generation has the best credit score.
The USA Today story implied that young people may not understand how credit works but it has more to do with what generation has the longest credit history. Younger generations have lower credit scores because they don’t have the opportunity to have a 20 or 30-year-old credit account. If a consumer has never been late and they have a credit card that is two years old vs someone that has a 30-year-old credit card; the person who has the 30-year-old credit card is going to have a higher score.
If the older person has missed payments has collections on their credit or public record then obviously they are going to have a lower credit score. For the most part, people pay their bills on time, just having a longer credit history is going to give consumers a better score.
It is very important for younger people who start to think about credit or if they are going to college and are suffering through that credit fiasco, we have going on right now. What they need to do is get a credit card established in their name early.
I have a friend at work who is going to college. I encouraged her to get her own credit card. She reached out to her credit union to find out if they report to all 3 repositories. It is very important to establish credit accounts with financial institutions that report to all 3 repositories. Use caution with smaller credit unions and banks that may report to only one of the three repositories.
Smaller institutions do that because there is a cost to report loan information with each repository. It doesn’t help to build credit with only one of the three repositories. If consumers apply for a car loan. If that finance company uses a different repository than the one the credit union uses, it will look like they have no history. Young consumers should establish a long credit history by getting a good credit card that pays back points without any fees. They should keep that credit card active it doesn’t have to be the credit card that is used all the time. They need to keep it active with one charge a month for their entire life.
They do not have to run balances or pay interest and incur costs. Consumers should pay them off every month just keep it open and active for the rest of their life. A good credit score will benefit consumers in many ways; from insurance, loans, and employment. Debt is not required to have a good credit report. there is no reason to have excess debt one open active credit card will get you into the 800’s fairly quickly provided you have had it for at least 5 or 6 or 7 years.
For more videos about credit and credit scoring check these out at www.thecreditguy.tv. If you are a mortgage lender please share this on your Facebook or LinkedIn page. If you have any questions, leave them down below I’d be happy to answer them.