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Educating teens about the impact of credit scores - “Building a Strong Credit Score for a Healthy Financial Life” / By: Jake Lepinskas

Young adults starting their independent financial lives are often bewildered by choices about the credit needed to accomplish their goals. Student loans, vehicle loans, and credit card debt are common sources of debt for Americans aged 18-24. Unfortunately, ignorance about how to best manage their various debts means they may cost their future selves a significant amount of extra expense. Why? The secret lies in what is called your “credit score”.

A credit score is a three-digit number that businesses use to determine how likely a potential borrower or customer is to pay loans, debts, and bills on time. It typically ranges from 300-850; a higher score signals that a person is in stronger financial shape and at lower risk of late payments or default. The average credit score in 2021 for people aged 57-75 was 740, while for those aged 18-24 years, it was only 679 (Sifontes, 2022).

Your credit score has a huge impact on whether a credit-related company will want to do business with you, and strongly influences the financial terms offered. A lower score means that you may not qualify for an apartment lease or new loans or credit cards, or that you will be stuck with higher interest rates on new debts. The lifetime value of a good credit score could save you tens or even hundreds of thousands of dollars (Black, Adams, 2021). 

Your credit score is constantly changing based on various factors. These include how much and what kinds of debt you have; what percentage of your available credit you are using (credit utilization); whether you have a history of uncollected debts or late payments; how long you’ve had your credit cards; and whether your available credit limits are increasing. “When I was in college, I had no clue that I was damaging my credit score by constantly signing up for so many new credit cards that were being offered to me in the mail,” says Beth Muroff, a retired Merrill Lynch auditor.

Consider following this advice from Phillip Robles, Private Client Banker at Chase Bank, to get your credit score started on the right track: “Never be late on your payments, keep your credit utilization under 50%, and don’t have too many credit inquiries in a single year.”


Consumer Financial Protection Bureau (2022). What is a Credit Score?

Sifontes, B. (2022). 30 Credit Score Statistics to Know in 2022

Black, M. & Adams, D.(2021). FICO Vs. VantageScore Credit Scores: What’s the Difference?


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