How Bad Credit at a Young Age Can Impact Your Life

Bad credit when you're young can set you up for a more difficult path as you get older. Learn what you can do to set yourself up for success in the future.

How Bad Credit at a Young Age Can Impact Your Life

• 38% of Americans under age 30 have a credit score below 621.
• Only 14% under age 30 have an Excellent score over 720.
• A score below 660 is generally considered Poor. Scores under 620 are commonly considered Bad.
• Lenders view people with poor credit as riskier borrowers.
• A lower score may indicate a person is less likely to make their payments. This means a lender may not get their money back on time.
• You must use credit to build your credit score. It takes time so it is best to start while you are young.
• Bad credit can hurt your chances of getting approved for:
  • Auto Loans
  • Personal Loans
  • Credit Cards
  • Mortgages
  • Employment
  • Housing Rentals
• If approved for credit, you’ll likely pay the highest interest rates available.
• You’ll likely pay higher insurance premiums.
• You may also have to pay security deposits for utilities like cell phones, electricity, or internet.
  • For cell phones with payment plans, you may not be approved or may have to pay more upfront.

Good Habits to Avoid Bad Credit

Trying to build credit and prevent a bad credit score? Looking for ways to repair your credit? Use these tips for building and improving credit:

• Pay your bills on time. Late payments are a big factor in your credit report.
• Don’t use all of the credit available to you.
  • Your credit utilization rate (the amount of credit you’re using vs. your credit limit) greatly impacts your score.
  • The less total credit you use shows you’re responsible with your spending.
• Don’t open credit accounts all at once.
  • Multiple inquiries on your credit report can hurt your score.
  • If you need a loan or credit card, do your research first to see if you’re qualified.
  • Apply only for one account at a time.
• Keep accounts open.
  • If you already have a credit card, don’t close the account.
  • Even if you’ve paid the balance off and stopped using the card, the account shows up on your credit history.
  • A longer history of open accounts with on-time payments and low credit usage could help improve your score.