It’s amazing what my mind allows me to remember. While I can’t tell you the names of my 7th-grade son’s teachers, I can go around the diamond and tell you the starting line-up of Cincinnati’s Big Red Machine from my childhood.
I’m not proud of it, but it’s a fact nonetheless.
However, I am proud of myself for recalling another fact. I have been preparing for an upcoming webinar later this month (Fact, Fiction & FICOs), and I remembered an article I read last year from CNNMoney that showed just how differently Millennials view credit. The article discussed how the number of consumers ages 18-29 who did not have a single credit card had doubled since 2007. At the end of 2012, 16% of these Millennials did not carry a single credit card, compared to just 8% five years earlier.
Knowing how important building a solid credit history is to the home buying process, I quickly zipped off to Google, and indeed found the article. I also found that the trend has continued.
A post by Frederic Huynh on Banking Analytics Blog in May highlighted that, as of October 2013, 19.9% of consumers ages 18-29 do not have a credit card. One in five!
Furthermore the blog reveals that this age group is not seeking out credit much either. Only 53% of the group had a single inquiry on file (down from 69% in October 2005).
So what impact might this new approach to credit have when these consumers go looking for a home? After all the National Association of Realtors just reported that the average age of a first-time homebuyer is 31, just a couple years removed from the age group we are looking at.
Well, the good news is we have seen credit scores for younger consumers rising. And reducing debt in other areas may help offset some of the student loan debt, stories of which have flooded the media. (More on that in a later post!)
However, length of credit history and types of credit in use are also factors used to determine one’s score, so living a credit card-free life is not necessarily all positive.
More importantly for these young consumers is to learn how to properly manage credit. The Consumer Federation of America earlier this year released results of a national survey that showed Millennials know less about credit and credit scores than the general population.
For us mortgage professionals, this is an outstanding opportunity to differentiate ourselves and help prepare future homebuyers.
So what are you doing to better educate prospects on the importance of credit?
Share your ideas below, connect with me on LinkedIn or register for MGIC’s free webinar Fact, Fiction & FICOs to learn ways MGIC can help in your efforts.Tags: Credit, FTHB, Homebuyer, Millennial, Mortgage Industry