70% Of College Students Damage Their Credit Shortly After Graduating
Navigating the financial world is difficult at any age, but particularly challenging for young adults. According to a new study* from Opportunity Financial, seven out of 10 college students make a credit-damaging decision shortly after graduation.
The survey looked at 2016 college graduates to see how their credit has fared over the last two years. They found 51% of respondents had missed at least one credit card payment by 30 days. Just 44% of college graduates said they had never missed a credit card payment. Nearly 30% had a delinquent utility account sent to collections.
Credit utilization makes up a large portion of a person’s credit score. This is the amount of credit used compared with the total amount of credit available. To maintain a high credit score, credit utilization should stay below 30%. Of those surveyed, 58% of 2016 college grads said they had a balance that exceeded that threshold.
Part of the issue may be in the limited financial education students receive in high school.
Last December, Champlain College conducted a nationwide assessment† of high school financial literacy. More than half of the states received a C rating or lower, mostly because they did not offer personal finance courses to students. These students then enter college with minimal knowledge of how to pay bills, save money, and maintain a budget — a skill set that is crucial for a healthy financial future.
Credit scores tend to rise with age because of increased financial stability and decreased debt. The Opportunity Financial survey showed 29% of recent college graduates had missed a student loan payment by over 90 days, and 15% were over 30 days delinquent on a car payment. These loans are less common among older adults, and may be easier to manage with higher wages.
This article was written by Bill Hardekopf from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.