Why Millennials Should Build Credit

By Waldy Diez SYRACUSE, N.Y. (NCC News) – A credit card is a way to borrow money from a bank and pay it back later. According to a recent Bankrate survey, 63 percent of millennials don’t own a credit card. Most of them just don’t want one because they already have too many student loans.

According to Tom Barkley, assistant professor of finance at Syracuse University, it doesn’t matter whether or not you have student loans.

“You don’t start paying your student loans, generally speaking, while you’re still a student, which means you don’t build any credit history by just having a student loan,” Professor Barkley said.

Barkley said that without any credit history, you can’t rent an apartment, buy a car or get a mortgage for a home.

When to start

According to Barkley, you should get a credit card as soon as you start college. Most banks or credit unions offer student credit cards.

“They are very sympathetic to students,” he said. “They won’t give you a very big credit limit; most students start out with a $500 credit card.”

He also stated that starting a credit card might be one of the most important tasks you do as a student.

“Having a credit card and being able to build your credit is as important or more important than being able to pay your student loans off when you graduate,” the finance professor said.

However, if you still don’t want a credit card just yet, there are other ways to slowly build credit for the future. Barkley says to always have your name on the lease and your utility bills.

“When it comes to paying bills, if you pay those bills yourself, rather than have it included under your landlord’s all-inclusive rent, then you will be demonstrating that you pay bills on time,” Barkley said.

According to the professor, paying your bills on time and at least the minimum payment are key features to building credit. However, he recommends paying all of your bill if you can, because you will build a stronger credit history to be able to take out larger loans in the future.

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