Having a good credit record and high credit score are essential tools in today's world for anyone who wants to buy a house or a new car, or start a business. Even if you've always paid your rent and every other bill on time, a low credit score can ruin your chances of getting a credit card or loan.Not only that, you may need a good credit score if you want to rent a home or even get a job.

Yet, according to credit information company TransUnion, 43 percent of 18-to-36-year-olds are lessening their chances of doing any of these things by saddling themselves with credit scores of 600 or less. To find out just how Millennials are damaging their own credit, TransUnion did an analysis of millions of credit records, comparing Millennials with the general population, and then published the results on the personal finance site GOBankingRates.

Here's what they found:

1. Millennials have shorter credit histories

The Millennials in TransUnion's study had an average credit history of 100 months, compared to 271 months for those over 37. That's hardly surprising, since Millennials have been in the work world for less time than their older peers.

There's nothing you can do to change that, but you can work on getting as good a credit history as you can in the shortest possible time. Get at least one credit card as early as is feasible, use it on a regular basis and then pay the bills on time each month. You can also ask your landlord to report your on-time rent payments to the credit bureaus, GOBankingRates notes.

2. Millennials sign up for credit cards and loans too often.

OK, I know I just told you to get yourself a credit card and create a credit history. But be careful not to overdo it, as many younger people seem to be doing. Millennials open a new line of credit (such as a credit card or loan) an average of once every 20 months, compared with once every 46 months for older people.

That's bad because credit bureaus and creditors alike take a negative view of opening too many credit cards too often--it makes you look desperate for credit. And the inquiries credit companies make before granting you that credit will lower your credit score in themselves, though not very much and only temporarily.

So open one or two new credit cads, not scads of them. And be wary of retail store cards, which may come with perks but tend to have high interest rates.

3. Millennials use too much of their available credit.

Credit bureaus look at how much credit you have available in relation to how much you're using. The higher percentage of available credit you have in use (your "credit utilization") the more reluctant creditors will be to lend you more money. TransUnion found the Millennials in its analysis were using an average 42 percent of their available credit, compared to older people, who are using an average 29 percent of theirs.

In their defense, some of this may be caused, directly or indirectly, by student loan debt, the crushing burden most college-educated Millennials share. Still, if you're a Millennial, try holding back on taking out new credit cards or other loans.

4. They aren't paying attention.

It's likely that the Millennials with the lowest credit scores have no idea what those scores are. In a separate survey, GOBankingRates asked Millennials about their credit scores and 34 percent said they'd never checked them at all. Another 14 percent had checked their credit scores some time in the past, but hadn't done so lately.

That's not good. Everyone should check their credit scores a least a couple of times a year, which you can do through a credit monitoring service and sometimes with your bank as well. Whatever your credit score, knowing what it is is an important first step toward raising it.

Published on: Nov 29, 2016
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