Swipe. Tap. Click. For many young adults, spending has never been faster. But more young adults are entering adulthood already in debt.
The average Gen Z credit card balance is about $3,500. For Millennials, it’s nearly $7,000.
At the same time, nearly half of Gen Z admits they don’t fully understand how credit scores work. That can be costly because one bad money move can get expensive fast.
That simple swipe can follow you into some of life’s biggest purchases.
“It matters a lot because this is what you’re going to set yourself up potentially for your first mortgage, for your first house, getting your first car,” said Zach Keister, a financial planner.
Landlords may check your credit. Insurers may look at it. Some employers may too.
Payment history makes up 35% of your FICO score, and a late payment can stick to your credit report for up to seven years.
Some things to watch out for now: Try not to use buy now pay later offers. Users are more likely to overspend.
Another mistake? Maxing out your card. Experts say using too much of your available credit, even if you pay on time, can still hurt your score.
“It will absolutely wreck your credit score,” said Keister.
And while social media is full of “credit hacks,” experts say many of them just shift the problem. Like moving old debt to a new zero-percent card without paying it down.
The good news: Building good credit doesn’t require perfection.
It requires smart habits:
- Pay on time
- Keep balances low
- Don’t open more credit than you can handle
- Check your credit report for errors
FTC research found 1 in 5 consumers had an error on at least one credit report.
“Priority should be figuring out a baseline budget,” said Keister.
Because the money decisions you make in your 20s can shape your options for decades.
And no, you do not need a perfect 850. In fact, only 1% to 2% of Americans have one.
What you need is consistency. Financial experts say the best time to learn about credit is before you need it. Free credit reports are available through annualcreditreport.com.
And if you’re a parent, experts say start those money conversations early. Because learning about debt at 16 is a lot cheaper than learning about it at 26.