Youth no bar to racking up terrible credit

By Russ Van Arsdale Executive director Northeast Contact, Special to the BDN
Posted Oct. 05, 2009, at 12:32 a.m.

April is Financial Literacy Month. So why are we advocating that people — especially young people — get a better handle on their financial knowledge six months later?

The hard answer is that we might have to tell young people twice (or three or four times) to get them to pay attention. Don’t believe it? Take a look at the 10 biggest myths most 14- to 21-year-olds think are absolutely true:

• At my age, I don’t need to worry about credit.

• Bad credit won’t keep me from getting a job.

• All credit cards are alike.

• All loan companies charge the same rates.

• The job of financial advertisers is to tell the truth.

• It’s OK to bounce a few checks.

• It’s OK to make the minimum payment on a credit card.

• Occasional late payments won’t hurt my credit.

• Fine print isn’t important.

• Young people don’t have credit scores.

This list was compiled through interviews with thousands of young people who tested a financial literacy site, www.FoolProofMe.com. Its founder is Will deHoo, 29, who describes the site as an independent source of information to help prepare young people for tomorrow’s financial challenges.

What concerns deHoo and others who study the spending habits of young people is the supposed invincibility the above list seems to reflect. Younger consumers by and large don’t seem to feel that bad credit can bite them. They may not see the rise in the student loan default rate (from 5.2 percent in 2007 to 6.7 percent last year) and other behavior as troubling.

DeHoo does, and his research shows that the answer lies with the younger set’s contemporaries. “Young people trust their peers,” said deHoo. “Young people are immersed in technology. Young people don’t want to appear foolish,” he continued, noting that those basics define the way the Web site delivers its messages. And they are messages that don’t pull punches.

“What do you get with a credit card? Debt is what you get with a credit card” is how FoolProof describes our maxed-out mindset. “Only blind fools blindly accept advertising” is another recurring theme.

The messages are actually a series of lessons aimed at high school-age viewers. They are taught by teens, and the curriculum has been tested by thousands of students in several states. FoolProof is endorsed by the National Association of Consumer Advocates and the Consumer Federation of America.

Funding comes from the national association representing credit unions. It’s one of a growing number of outreach efforts by financial institutions seeking to help prepare young people for an increasingly complicated and challenging world.

It’s free for schools or individuals to use and is worth looking at. Financial literacy classes are also available through a number of nonprofit organizations and associations around the state.

The State Treasurer’s Council on Financial Literacy made grants in each of the last two years to support financial literacy. Jobs for Maine’s Graduates, the Institute for Financial Literacy, Coastal Enterprises Inc., Junior Achievement of Maine, Maine Centers for Women, Work and Community, Good Will-Hinckley, Phoenix Foundation and Consumer Credit Counseling Services received grants in 2008.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or e-mail contacexdir@live.com.

http://bangordailynews.com/2009/10/05/business/youth-no-bar-to-racking-up-terrible-credit/ printed on July 24, 2014