Survey: Serious credit dings are common among recent grads
CHICAGO, April 11, 2018 /PRNewswire/ — Financial Literacy Month is in full swing, but new data suggest that many college students are having trouble managing their money after graduation.
Sixty-nine percent of recent college grads made damaging financial mistakes soon after finishing school, according to survey results released today by the lending firm OppLoans. The survey was conducted at the end of March and asked 500 members of the class of 2016 about their money habits since graduation.
Approximately seven in ten reported at least one of the following infractions, which are known to lower a consumer’s credit score:
- Paying credit card bills more than 30 days late
- Paying federal student loans more than 90 days late
- Paying private student loans more than 45 days late
- Paying car loans more than 30 days late
- Utility bills that went to a collection agency
- Carrying a credit card balance that exceeds 30 percent of the card’s limit
Late credit card payments were the most common misstep, with 51 percent of respondents letting a bill go thirty days past due. Forty-five percent of respondents reported late loan payments. (Twenty-nine percent said they had paid their federal student loans over 90 days late, and 19 percent said they had paid their private student loans more than 45 days late.) Twenty-nine percent said a utility account in their name had been sent to a collection agency. Fifty-eight percent said they had exceeded 30 percent of their credit card limit since graduation, with 37 percent saying their balance was still that high.
Excerpts From the OppU Credit Survey
Graduation brings a lot of changes for college students. And while the first couple years out of school can be exciting, they’re also dotted with pitfalls—including financial ones.
Recently, high schools and colleges have stepped up financial literacy initiatives to prepare students for real-world money management. But many of these efforts have been lackluster, with a recent assessment giving 50 percent of state programs a grade of “C” or lower.
To explore credit damage among recent college grads, we asked 500 members of the class of 2016 about their money habits since finishing school. With just two years behind them, an overwhelming majority—seven in ten—reported major financial missteps.
What’s the Harm?
The impact of a particular infraction will vary according to a number of different factors, but Equifax, one of the three major credit bureaus, found that a single 30-day missed payment can lower a FICO score by 60 to 110 points for a borrower with fair to excellent credit. Additionally, once a black mark is recorded on a credit report, it stays there for a long time—seven years. These dings can eventually be offset, but repairing them takes time and a consistent track record of credit-boosting behavior.
Credit Card Debt Ratio
Though FICO does not disclose its credit-scoring algorithm, credit card debt that exceeds 30 percent of a card’s credit limit is widely acknowledged to negatively impact a borrower’s credit score. Among the grads surveyed, 58 percent said they had exceeded 30 percent of their card’s credit limit since graduation. Thirty-seven percent said they still carried credit card debt above that level.
Read the entire survey here.
The survey was conducted by OppLoans in conjunction with Pollfish, which administered it. “This survey shows that many college students are making early mistakes that can do lasting damage to their credit,” said Matt Pelkey, who led the research for OppLoans. “They’re starting off on the wrong foot, and many probably don’t understand the consequences.”
Full survey results, as well as charts and an infographic, are available through OppU, the financial education arm of OppLoans.
Opportunity Financial, LLC, doing business as OppLoans, is one of the highest-rated online lenders and service providers in the industry. With faster funding, significantly lower rates, total transparency, and unmatched customer service, OppLoans provides non-prime borrowers a safe and reliable alternative to payday lending.
For more information email John O’Reilly or call (312) 212-8079 extension 818.
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