June 26th, 2014

Credit Scores Are a Mystery for Many Millennials

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Credit Scores Are a Mystery for Many Millennials

A recent study released by the Consumer Federation of America and VantageScore Solutions found that in comparison to older Americans, 18-34 year-olds are less knowledgeable about credit.

While it’s not surprising that older consumers tend to know more about credit scores than younger consumers, it is concerning. Credit knowledge is especially important for young adults because they can either form good or bad habits while they’re building their credit from scratch. For many millennials, student loans are their introduction to the credit world. Handling those loans can either help them establish good credit if they understand how credit works, or could devastate their credit health if they don’t understand the implication of late payments.

So what exactly are they confused about?

Fundamentally, it seems that millennials don’t understand what factors are used (and what factors aren’t used) to calculate scores. For example, they’re more likely to think that their age is a factor. In reality, while lenders care about your average age of open credit lines, your actual age isn’t included on your credit report and doesn’t affect your score. Moreover, only 6 percent correctly identified the factors that could potentially impact their score, such as their total number of accounts and number of hard inquiries.

In addition, many millennials don’t seem to grasp how much credit scores matter. This is a serious issue because it could mean that they’re unaware of the financial implications of bad credit.

Are they doing anything right?

Fortunately, most millennials understand that high credit card utilization, late payments and derogatory marks can negatively affect their score. Additionally, 50 percent of millennials realize that credit repair companies are rarely (if ever) helpful in fixing credit report errors and improving credit scores.

Also encouraging: today’s young adults carry lower credit balances and are less likely to pay their bills late compared to Generation X. Combine their good financial habits with some credit education and we’re confident that millennials should have the tools they need to improve their financial situations.

What can millennials do to educate themselves?

The study revealed that millennials who have gotten copies of their credit reports know more about credit than those who haven’t. Therefore, a good place to start educating yourself is Credit Karma. Here, you’ll get both your TransUnion credit report and credit scores for free. Knowing what is on your credit report will not only teach you what factors affect your credit score, but will also help you ensure that the correct information is being reported. Secondly, the study recommends that people take the Credit Score Quiz, which not only assesses people’s credit knowledge, but also provides helpful information and facts. Finally, track your credit score to stay on top of your credit health. Millennials might not know much about credit scores this year, but it doesn’t have to stay that way!


is a Member Support Specialist at Credit Karma. She spends her free time reading, devouring desserts and talking to her slightly deaf cat, Pusho. When she’s not doing those things, she is dreaming about doing them.

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.


  1. There is no way that Credit Karma is even close to right. I haven’t missed a payment on ANYTHING in 8 or 9 years and it still shows me as only making 95% of payments on time..and that figure never changes, ever. Ridiculous.

    Fire at 11:22 am on June 26, 2014
  2. Mike

    Hi Fire – All of the credit information on Credit Karma comes directly from TransUnion, one of the three major credit bureaus. If you think you have wrong information on your account, I’d suggest consulting this article for more details on the dispute process: https://www.creditkarma.com/article/dispute-credit-report-errors


    Mike at 4:44 pm on June 26, 2014
  3. After seeing your recomendations for a capital one card, you showed my 613 score was within the guidlines to get a card.Capital one showed my score as 574,almost a 40 point difference I hve made house payments for 8 years,never late,or missed a payment,and just paid off 6900 truck loan,never late or missed a payment.The outstanding bills,are all Dr.bills incured when I was diagnosed with cancer.6 weeks of chemo,and radiation treatments.followed by an illiostomy.my bill of around 400,000 I owe aprox 1700 dollars.Thats nothing.I don’t know how you can recomend Capital one.They suck.And following your guidlines to improve my credit got me nothing but a hard inquiry that will be on my credeit report for 2 years

    Geoff at 11:41 am on July 14, 2014
  4. Mike

    Hi Geoff – I’m really sorry to hear about all that. Our approval odds are unfortunately never a guarantee, and lenders may take other factors into account when considering your application. Please let me know if you have any other questions about this.

    Mike at 8:54 am on July 15, 2014

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