In credit, but not credit worthy: The millennial debt dilemma

Forget millennial pink; the so-called ‘Peter Pan’ generation are increasingly staying firmly in the black. Pardon the pun, but beyond it the sentiment is correct. In a previous blog post, I discussed how those of us born between 1981 and 1996 (myself included) are significantly warier of debt than the baby boomers that came before us. Undoubtedly this shift in attitude towards debt is a healthy one – but riddle me this: why should a healthy avoidance of risky debt equal an unhealthy credit score?

The answer, of course, is that this shouldn’t be the case. Yet the millennial trend towards debt avoidance can often mean that this group lacks both the understanding and the opportunity to build a strong credit profile. The result is that, despite admirably avoiding the troubles that come with mounting debts, another problem may rear its head later in life – and it’s a significant one. With no credit profile to speak of, it can be extremely difficult to convince lenders to provide the biggest loan you’re ever likely to need: a mortgage.

This is certainly a conundrum. Should people be forced to take on credit and store cards against their better judgement simply to prove their reliability? Given the huge problems that debt can cause, this doesn’t feel like it should be the only choice. Luckily, times are a-changing. It was long overdue, but nonetheless brilliant to read the news that responsible renters will now benefit from an improved credit score by paying on time. It is expected that 79% of the 1.2 million tenants being tracked by Experian stand to improve their credit scores as a result. A hugely positive step in the right direction for generation rent.

At Laybuy, keen to support the shift away from risky credit and store cards, we too partner with Experian. Our platform allows consumers to purchase aspirational products affordably, spreading the cost over six weekly, interest free payments. Our global partnership with Experian means that users who meet these payments will see a positive impact on their credit score. Our hope is that this provides yet another way for the debt wary to build the credit profile required for their futures – no interest laden credit or store cards required.

An avoidance of risky financial behaviours should always be rewarded, never penalised. Here’s hoping that support for savvy spenders of all generations is on the up.