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Experienced lawyers, driven to succeed on your behalf.

Millennials and debt: Tips for future financial success


One step towards financial success is a good credit score.

Financial success depends on a variety of factors. A strong savings plan, diversified assets and the ability to manage debts can all play a part. Putting together a plan for financial success can be intimidating, particularly for Millennials that are beginning to establish themselves professionally. It can help to break the process down into manageable components. One of which is building a strong credit score.

More on credit scores

According to Experian, Millennials have an average credit score of 625 out of 850. An article in The Huffington Post discussed credit scores, noting a perfect score is nearly unattainable. The credit score, or FICO score, is defined as:

FICO Scores are used by lenders and others to assess the credit risk of prospective borrowers or existing customers, in order to help make credit and marketing decisions. These scores are derived solely from the information available on credit bureau reports.

Essentially, a FICO Score is designed to measure an applicant’s financial responsibility. It takes into account the following:

  • Payment history. This portion focuses on whether or not payments were made on time. It accounts for 35 percent of the score.
  • Amounts owed. The score also takes debt into consideration, essentially reviewing whether or not there are credit accounts and if money is owed. This makes up 30 percent of the score.
  • Length of credit history. This portion reviews how long the applicant has used credit. Generally, a longer credit history leads to a higher FICO score. This makes 15 percent of the score.
  • Credit mix. 10 percent of the score is determined by reviewing the types of credit cards, retail store accounts, installment loans, finance company accounts and mortgage loans present.
  • New credit. The FICO score also reviews how many accounts were recently opened. The company’s site notes that a high number of recently opened accounts increase the likelihood of a credit risk.

These factors are taken into account and used to calculate a FICO score. The score ranges from a serious risk at 300 to perfect credit at 850. Those who have lower rates may not qualify for loans. If they do, they are generally required to pay a higher interest rate. The Huffington Post piece states that a score of 760 or higher generally results in the best rates and credit limits available for applicants. This is just above the average noted for Millennials above. Arguably, one of the easiest ways for those who currently have a low FICO score to build their credit is by making payments on time.

Unmanageable credit debt? Bankruptcy can help.

For those who are unable to manage their credit card debt, bankruptcy may be an option. Bankruptcy is designed to offer a fresh financial start, and credit card debt generally qualifies.

Those who are considering bankruptcy should contact an experienced bankruptcy lawyer. This legal professional can review the process and help you determine if it is the right option for you.