Improving Millennials’ Bad Credit Scores
Some of this is for good reason. For example, Millennials tend to pay more toward their student loans than people of earlier generations (they also have higher student loans than any earlier generation).
But the main reason Millennials have bad credit is, ironically, because of their decreased use of credit. Approximately one third of Millennials do not even have a credit card. When credit bureaus check someone’s creditworthiness, one of the prime factors is how responsibly credit is used. If there is no credit being used, the credit bureaus equate it with bad credit.
Lack of credit, or bad credit, can affect every area of life. Some landlords may not want to rent to someone with bad or no credit. Buying a house or car is more expensive if someone has bad credit because the interest rate will be higher.
How can Millennials fix their bad credit? Apply for credit cards. Typically, someone’s first credit card will have a low limit and a higher interest rate. But be patient – after responsibly using credit for a year or two, other creditors will become willing to offer higher limits and lower rates.
Another thing Millennials should do to increase their credit is reduce the number of times they apply. If someone suddenly applies for many cards at once, creditors will see it and assume that the person has financial problems and should not be given more credit.
The most important thing for Millennials (or anyone) to do to get their credit better is simply to obtain credit and use it responsibly.
If you have credit issues, accounts in collections, or inaccurate credit reports, contact Culik Law to see if we can help you.