An entire generation of young people are ruining their credit ratings without even realising, new research has shown.
Online credit score provider, My Credit Monitor, surveyed 1,000 under-30s - labelled “the debt set” - to find a staggering 75 per cent had no idea what their credit score was before they had their first ever credit card, and just over 20 per cent were forced to move back in with their parents to help clear debts after misusing one.
The biggest mistake students and young people are making is maxing out their credit card, or spreading a purchase over several cards.
With almost 18 per cent of over-30s still paying back money they spent in their teens and 20s, the survey found it “unsurprising” that 84 per cent of respondents want to see more personal finance education being taught at schools.
What many young people don’t immediately think about is how they’re going to pay money back, found the survey. “Buying on credit doesn’t seem like we’re using real money, but our credit scores are one of the most important things we’ll ever have,” it added. “A good credit score is the difference between getting a mortgage in the future or not, getting a loan with a lower interest rate, or even getting a job.”
Sati Dhanjal, vice president, added: “It’s clear young people don’t get enough education about one of the most important factors they’re going to have to deal with when they reach independence: money. Things are hard enough for them, with a lack of jobs and the recession, without adding credit card debt into the mix.”
The survey has come shortly after a similar one from the Resolution Foundation found today’s young people have had the “bad luck” of entering the jobs market at a tough time, meaning their lifetime earnings could be “permanently scarred.”
Highlighting a “generational pay penalty,” the findings showed how millennials are at risk of being the first generation to earn £8,000 less in their 20s than their predecessors.
The likelihood of young people owning their own home was scrutinised too; baby boomers were 50 per cent more likely to own their home by the time they were 30, compared to millennials today, meaning renting culture will see millennials spend £44,000 more on rent by the time they reach 30, compared to the baby boomers.
This summer has seen students, graduates, and the wider higher education sector speak out amid rising tuition fees, a retrospective student loan hike, and the replacement of maintenance grants with loans, all moves protesters have argued will saddle an entire generation with debt which will take a lifetime to pay off.
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