What Percentage of Young People Never Check Their Credit Score?
Understand the importance of credit scores for young adults and learn simple steps to access and interpret your financial standing.
A credit score is a three-digit number representing an individual’s creditworthiness, derived from credit reports. It provides lenders with a quick assessment of risk. This score plays a fundamental role in various financial transactions, influencing a person’s ability to borrow money, secure housing, and obtain certain services. Understanding and managing this score is important for personal financial health.
Understanding Young Adults’ Credit Score Awareness
Many young adults, particularly those aged 18 to 24, often overlook regularly checking their credit scores. Studies indicate that approximately 40% of Gen Z adults in this age bracket have never accessed their score. This lack of engagement leaves a significant portion unaware of a crucial aspect of their financial standing.
Several factors contribute to this awareness gap. A primary reason is a lack of formal financial education, as credit management is not consistently taught. Some young individuals may assume they are too young for a credit history, fear a low score, or not know where to access their score for free. This limited engagement means many are less familiar with how credit operates and its potential impact.
The Role of Credit Scores in Early Adulthood
A credit score holds considerable weight for young adults navigating independence. It directly impacts their ability to secure essential services and opportunities. Landlords frequently review credit scores for rental applications, where a low score can lead to denial or a larger security deposit. Utility providers may also conduct credit checks before establishing service, sometimes requiring a deposit if the score is unfavorable.
Accessing various forms of credit depends heavily on a strong credit score. Obtaining an auto loan, a personal loan, or a credit card often requires meeting specific thresholds. A lower score can result in higher interest rates, increasing the total cost of borrowing. Credit scores can also influence insurance premiums and, in certain professional fields, employer background checks.
How to Access and Interpret Your Credit Score
Individuals can access their credit reports annually for free from each of the three major credit bureaus: Equifax, Experian, and TransUnion. This access is available through AnnualCreditReport.com. While credit reports provide detailed information, credit scores are often available through various other avenues. Many banking applications, credit card providers, and independent financial websites offer free access to credit scores as a customer benefit.
A credit score is typically a three-digit number, often ranging from 300 to 850, that summarizes the information in a credit report. These scores are generally categorized into ranges such as excellent, very good, good, fair, or poor. Several key factors influence this score, including an individual’s payment history, which accounts for on-time payments, and credit utilization, representing the amount of credit used relative to the total available credit. Other significant components include the length of one’s credit history, the types of credit accounts held, and the number of recently opened credit accounts.