Most people these days have increased awareness when it comes to the importance of having a good credit score and history. Most older people have already built up a credit history and have had time to rectify any mistakes that they may have made financially in their younger years. However, for the younger generation things are more difficult as many have not had the opportunity to build a credit history and score yet they are the most likely to require good credit because they are at the age where they will need credit to buy a car or home in the future.
With this in mind, some millennials have been taking out credit such as credit cards in a bid to try and build up a credit history and score to help them when it comes to future purchases. However, officials have warned the younger generation to be careful as it can be all too easy to actually end up damaging your credit rather than aiding it unless you exercise caution.
Younger people need to resist temptation and develop good habits
Experts have said that younger people need to make sure that they learn more about how credit scoring works and that they need to try and resist temptation when taking out credit such as a credit card. For those who are getting a card for the first time the temptation to simply spend on it without the means to repay the balance in full each month can be high and this could lead to them actually damaging their future credit rather than setting themselves up for a bright financial future.
This was proven by research that was carried out amongst older consumers about their spending habits when they were in their twenties. Many admitted to having missed one or more payments on their debts during their younger years with many others admitting to finding it difficult to control their spending when they had a credit card to use. Many younger people see a credit card as ‘free money’ because they fail to think about the consequences of unnecessary spending and the fact that they will have to repay the money that they spend.
Those who do decide to take out a credit card in order to try and build a credit history are being urged to ensure that they use the card sensibly and for purchases that they need to make and that they then repay the balance in full each month to avoid interest charges and fees.