The “Credit Fumble” is the phenomenon where young adults, new to credit and many without any financial education, make significant financial mistakes. Recent research from Credit Karma suggests that more than two-thirds of young adults make at least one Credit Fumble before entering their 30s.
Credit Karma’s Credit Fumble research finally quantifies what appears to be a pattern of behavior among Americans. These mistakes can have a long-term impact on people’s lives, but it doesn’t have to be this way.
This research draws upon a survey done in late 2015, in partnership with Qualtrics, of 1,051 Americans between the age of 31-44 about the trouble they faced managing their personal finances before entering their thirties. This survey, taken alongside data from Credit Karma’s more than 45 million members, puts into hard numbers what has long been suspected to be true: new-to-credit consumers have the freedom to borrow, but not always the education to manage the responsibility, and it’s taking its toll.
The lessons are clear. These early credit mistakes are more common than we think and they affect people in very real ways. With better education and learning tools—both for people currently borrowing, and young adults who are or are about to be credit-eligible—this cycle could be prevented.