Millennials are a generation with a reputation for their cultural and technological knowledge. Unfortunately, many young people are more wary of credit cards than older generations. They either misunderstand or are unaware of the benefits of using credit cards wisely. And when it comes to being savvy about credit cards, they could learn much from their parents.
Their fondness for forgoing credit cards has given millennials a truly dubious honor: the lowest credit scores among all generations.
Breaking Bad Habits
More and more millennials are forgoing credit cards in order to avoid perceived pitfalls. But skipping out on credit cards adversely affects one’s credit history because it leads to “thin file.” Having a dearth of credit history can pose a problem generating a credit score. This may also give future lenders pause when considering loans. Having a strong credit history gives lenders confidence that you are a lower risk. When buying a home, credit history plays an important role. But even though home-ownership seems far off for most young people, poor credit can prove problematic when applying for a credit card or obtaining a lease.
For millennials, it’s important to obtain a credit card even if it’s only for a few bills. Young people that put off getting a credit card until later in life will find how much more difficult their financial lives will become. Millennials need to develop a credit history and the easiest way is through good credit card habits.
Are you a millennial thinking of obtaining a credit card? We’d love to hear from you in the comments below.