More than Two-Thirds of Young Adults Make Significant Financial Mistakes
New Credit Karma research shows Credit Fumbles in early adulthood are fueled by a lack of financial education and have a lasting impact on quality of life
January 21, 2016
Credit Karma announced today the results of its research into the “Credit Fumble” phenomenon, a behavioral cycle where young consumers, many without the necessary financial education, fall victim to largely avoidable financial mistakes.
Drawing upon a survey of 1,051 Americans between the age of 31-44 and data from Credit Karma’s more than 45 million members, the company found:
- More than two-thirds of people surveyed (68 percent) made at least one major Credit Fumble before turning 30: either overspending on credit cards, missing payments, having an account sent to collections, or defaulting on a loan.
- Three out of four of respondents felt like the financial mistakes they made before they turned 30 had a negative impact on the quality of their life.
- Only 28 percent of people surveyed received some type of personal finance education before college, with the majority of that education (58 percent) coming from parents.
- More than two-thirds of people surveyed (69 percent) did not properly understand what credit scores were when they got their first credit card; 73 percent said that better financial education could have prevented them from making credit-related mistakes.
- These Credit Fumbles make it hard for people to improve their financial situation as an adult: 61 percent of people surveyed were turned down for a credit card after making a Credit Fumble, more than a quarter (26 percent) had to move back in with their parents to recover financially.
“Credit Karma’s Credit Fumble research quantifies a phenomenon that’s played out for too long in America, with young adults making unnecessary mistakes without the right financial education that have a big impact on their lives,” said Credit Karma CEO and Founder Kenneth Lin. “These early mistakes can have a lingering impact on the quality of people’s lives and we feel that with better, targeted education and learning tools for new-to-credit consumers, this cycle can be broken.”
Since 2014, Credit Karma has worked with college and university students across the country to educate young Americans before their first touch point with credit, through its Campus Challenge and Student Ambassador program. Alongside free credit scores and reports, it offers its members friendly, personalized information to help each of them understand and make the most of their individual situation.
To create a free account, visit www.CreditKarma.com.
About Credit Karma
Credit Karma’s goal is to save Americans time and money. Through analysis of more than 45 million members’ finances, Credit Karma researches and recommends credit cards, loans and insurance based on each individual’s specific credit profile, drastically simplifying some of the most confusing and tedious yet important tasks in personal finance.
The company started by providing free credit scores to recreate the financial industry around people instead of banks. It continues to expand its completely free offerings including its Credit Score Simulator, credit monitoring and friendly, personalized information to help each person understand and make the most of their individual situation.
To create a free account, visit www.CreditKarma.com or download the mobile app from the Google Play™ or Apple® App Store℠.
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