13 Reasons Millennials Don’t Understand How to Build Credit

13 Reasons Millennials Don’t Understand How to Build Credit

Millennials are a struggling lot when it comes to matters credit building. It is a truth that various surveys have proven. The more disconcerting finding has been that credit unawareness is merely a symptom of a more severe condition. Millennials struggle with not only building and maintaining credit but also with saving, budgeting and reining in expenditure. Here are 13 reasons why this is so.

Financial illiteracy

Millennials’ financial literacy mostly stops at basic money use and computations. Regarding building credit, many simply do not know how to do it. In a survey, some wrongly thought that maxing out credit cards and repaying on time would build credit, while others deemed credit cards as a straight source of money rather than loans; in addition to many other inaccurate notions.

Lack of interest

The most prominent pointer to Millennials’ lack of interest in how credit works is that many of them do not even bother to get their credit reports yet everyone is entitled to a free credit report yearly. This shows that many a Millennial do not know the significant role that checking one’s status plays in credit score calculations.

Parent disinterest

Millennials are very attached to their parents, and most of them are unable to function optimally independent of their parents. Sadly, many parents have not taken the initiative to educate their children financially regarding matters credit building, saving and budgeting.

Academics focused curriculum

The fact that Millennial curriculums were largely deficient in financial subjects does not help matters. Financial literacy subjects were only introduced in curriculums in 2014 placing Millennials out of the bracket by a big margin.

Combined with the lack of interest; Millennials are, thus, forced to learn on the go with experience as the main medium of learning which increases the probability of making financial mistakes.

Extended adolescence

Millennials remain dependent on their parents late or midway into their twenties. This is because the job market demands more, with the minimum for getting a good often being a college degree which lasts four years. Some even go on to get a master’s degree. In this dependent state, the need to know how to build credit is less pronounced.

Lack of jobs

The lack of jobs is also a significant factor. Without a source of income, Millennials do not see the need to bother with knowing the workings of credit and how to ensure they have a high score. They use their parent’s credit cards and thus, take advantage of their parents’ credit scores.

Hand to mouth

Those who find something to do in the meantime tend to earn very little. Therefore, they are more inclined to live from hand to mouth, and in such a state, the pressures to survive and move a step further in life relegate financial literacy into the lower slots of their priority lists.

Entrepreneur influence

Almost 50% of Millennial mentors are entrepreneurs, and some of them are very vocal on the dangers of using credit facilities, particularly credit cards. They thus, influence Millennials against the whole idea of credit, inadvertently including how to build credit.


Millennials prefer cash to credit cards. Since it is natural to know more about something of interest, they, therefore, end up knowing more about the workings of cash, which are straightforward, as opposed to the workings of credit.

Unknown impact of a good score

Millennials do not fully comprehend the importance of a good credit score. They know that a good score plays a role in calculating their rent, determining interest rates later in life when they decide to take a mortgage, etc., but they do not know the significant extent to which this is so.

Fear of credit cards

Since 2008, fewer young people have been signing up for credit cards. In surveys, some report to being afraid of credit cards outright. Experts suppose the fear comes down to worst case scenarios relating to poor card use being played up while successful use is downplayed and given little to no airtime.

Conflicting information

For those interested in finding out more about building credit, the challenge of conflicting information arises. This is especially so online where different financial experts propose different ways of looking at the subject as well as varied ways of bumping up one’s score. Things become worse for Millennials who seek enlightenment from peers, who are often no better informed.


The challenging economic times have brought about despair with an increased number of Millennials seeking professional help. Many report that in matters finances, they have no idea of where to begin considering that they face a tight job market with student loans hanging over their heads. In such scenarios, many wrongly see gaining knowledge on how to build credit to be of lesser importance.

In closing, financial literacy is an easy to comprehend topic if only the interest in Millennials is kindled. Organizations have been implementing drives to remedy the situation, and the fact that financial education now features in curriculums means that the scope of the problem is confined to Millennials and earlier generations.

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