Millennials need to work hard on their finances due to job market fluctuations and the aftereffects of the recession. Witnessing the perils of the housing bubble and the bad investments made by their parents, you would think that this age group would be more aware of its finances, but a report from Experian revealed that is not necessarily the case. The report found that millennials, aged 19 to 29, have the lowest average credit score of any age group, at 628. Generation Y's average credit score is a bit underwhelming, and Experian said that millennials lack important credit knowledge, have high credit-utilization ratios and are constantly late making credit card payments.
Even though this age group may not seem to have its finances under control, the report showed that millennials have the second lowest average amount of debt, at $23,332, and the average balance of their credit cards is $2,682. If you're part of this generation and just be aware that your credit score getting hurt is a problem. This will play a huge factor in your finances later in life, so it is imperative you start early in building a good credit score. Here are a few tips to help you assemble healthy credit:
Track your debt carefully
Overusing your credit card can result in a high credit-utilization ratio, but if you're smart with your spending, you have nothing to worry about. Experian reported that the average utilization ratio among millennials is 37 percent, which is over the average of 30 percent. To keep this ratio down, track every expense and pay them off as soon as possible. Taking care of your balance in a prompt manner will help you avoid sinking into debt and alleviate any stress you may have.
If you're applying for your first card, investigate all the options you have. The baby boomer generation has an average of 2.66 bank cards, but it is best to only have one. Secured credit cards can be a great option if you're starting off, as they can limit your spending, and you would be able to move to a low-interest card after you have built up a good score.
Keep on top of your payments
Paying bills can be a dreaded part of your daily errands, but you should be taking care of these expenses on time and paying in full. Forgetting about a payment can result in a late fee and your credit score being cut down a few points. If you need assistance with maintaining a prompt schedule, enroll in automatic payments with your bank or credit card company. This way, you won't have to worry about missing a payment, because it will already be done for you.
Check your credit report
As you're keeping your debt down, run a credit report every now and again. You can see that your balances are correct and there are no mistakes, such as an accidental collection in your name.