Question: What Percentage of 18 and 19 Year Olds Don’t Have a Credit Score?

May 11, 2015
Credit Scores, Question of the Day, Research, Current Events, Chart of the Week, Credit Reports

From CPFB report: Over 80%, which is not necessarily surprising since we know that many fewer millenials have credit cards which typically serve as an entree to the credit world.  This chart shows how the share of consumers without a credit score declines as age increases:

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Why does this matter?  

The CFPB report’s conclusions provide one consequence of not having a score (emphasis is mine):

Consumers with limited credit histories established in the records of the three NCRAs generally have a harder time obtaining credit as a result because many lenders do not extend credit to consumers without a scored credit record or do so only in quite narrow circumstances. While there has been a lot of attention paid to the problem of limited credit history and to various forms of alternative data that might mitigate it, very little is known about the number of consumers who are affected and even less is known about their demographic characteristics.

Additional resource:

When people lack a credit score, the impact on their lives can be “profound,” said Richard Cordray, the bureau’s director, in a call with reporters. Their lack of credit history can bar them from getting an education, starting a business or buying a house. “It can preclude them from accessing credit,” he said, “ and taking advantage of certain opportunities.”

Here are some great follow-up questions to ask your students about this resource:

  1. Why do you think so many 18 and 19 year-olds do not have a credit score?
  1. How can NOT having a credit score at this age impact these individuals after they graduate college?
  1. What are some steps you recommend to 18 and 19 year-olds who do not have a credit score to get started on establishing credit and get a score?
  1. Do you know if you have a credit score? If so, do you know what it is? If not, what can you do to find out if you have one?

Want this resource and questions in slide format to use in class? Click here!

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.