Millennials now make up around a quarter of Australia’s population and are fast becoming the largest consumer group as their incomes grow and they begin making more purchases on large ticket items.
But a recent report by a large Australian credit reporting agency reveals that many Millennials have little to know understanding of what a “Credit Report” is and how it may affect them in the future as they try to get loans for houses, cars and other investments.
Millennials and Debt
Defined as people born between 1982 and 2002, Millennials are now the largest generation group in human history, surpassing even the “Baby Boomers”. Millennials have always been a generation that has – statistically speaking – carried a lot of debt when compared to older generations.
This is often attributed to higher student loan debt, the use of credit cards for luxury it purchases and a low savings rate. But how many Millennials understand just how much of this financial information is tracked on their personal credit history?
As results from a recent report show, very few…
- 64% had not heard or didn’t understand the term “credit report”
- 73% were not aware of recent changes to Comprehensive Credit Reporting (CCR), which allow for more detailed information of their credit history and ability to pay off debt to be recorded on their credit score.
The vast majority were also not aware how this credit score affects their ability to get credit in the future and the interest rates they will pay on loans they apply for.
When it was explained that every time they apply for credit, which includes…
- All loans applications (cars, houses, personal)
- Buy now pay later purchases
- Phone and Internet plans
- Utilities, etc
…was all recorded on their credit history, which is then available to all future credit providers who make their decisions on whether to loan you money and at what interest rate based on these credit scores, many Millennials were very interested to learn more.
In fact 72% like the idea of getting a better deal if they had a better credit score and would make an effort to improve their credit score.
Over half were worried about missing out on a good deal or getting finance at all because of bad credit score.
So What Affects Your Credit Score And How Can Millennials Improve Theirs
In the past only your applications for credit and any defaults, or late/non-payments were recorded, but with the recent CCR changes in 2014 more information is now provided by the lender to the credit rating agencies that also shows when you made payments regularly and on time, what loans you repaid in full and any current credit accounts you have open.
So while giving these agencies and therefore lenders access to more information might seem scary at first, it also provides people with the opportunity to quickly build a positive credit score by following a few simple steps.
Pay Of Or Resolve Any Current Issues With Creditors:
This may be for a loan or for everyday bills such as electricity, telephone or Internet. If you cannot pay them in full arrange a payment plan you can afford as this will instantly start to repair any negative marks on your credit score.
Obtain A Copy Of Your Credit File
You can get a copy of your credit file through one of Australia’s credit bureaus. This is important as it will show you your complete credit history and allow you to follow up and correct any errors that may be negatively affecting your credit score. Click here to obtain a copy of your credit file.
Pay All Future Bills On Time
Never take on any debt that you cannot comfortably pay and always try to set up direct debits for monthly bills so you don’t accidentally forget to pay them on time. Fixing up any past debts or negotiating payment plans with debt collectors who will improve help avoid negative marks on your file.
Build Your Score
You don’t want to avoid debt altogether, because when you take on debt and make repayment on or before your due date this is also recorded on your file for lenders to see that you have a good history of repaying debt.
Building a good credit score is crucial if you have future plans of buying your own home or want to get a loans for a car or other purchases. So always monitor your debt and avoid overdue or non payments at any cost and you’’ be able to access credit at a good interest rate whenever the need arises.