Should we be teaching kids about credit ratings before they leave school?

By Paul Ryan

Credit ratings EducationYou may have had the chance to listen to our podcasts with Gavin Symes, Executive Director of Credit Repair Australia.

In the podcast Gavin and I discussed the importance of having a clean credit rating and how recent changes to the privacy laws affects consumer’s ability to borrow money and seek credit.

Gavin was tremendous in explaining credit scoring and the process consumers should follow if they find themselves in a difficult position financially.

For many years, I have been a strong advocate for consumers to understand how important their individual credit rating is. Without putting too fine a point on it, your credit rating should be considered as one of your most important assets.

Unfortunately and as Gavin reiterated the findings of credit reporting organisation Veda, where it was found 80% of Australians hadn’t checked their credit reports and 50% of them didn’t realise they had one.

It basically means we have a gap in our education process and we need to be doing more especially with our kids. There is no better time than the present to teaching our kids the value of money and their credit score.

I am a big believer that finance, loans and credit should form part of the school curriculum for students in years 11 and 12. It should form part of the curriculum at Technical Colleges and perhaps even in the first year of university studies.

As an example, I was chatting to a 23 year-old the other day and they made a comment about how valuable the information on simplyskit was because, in their words, they weren’t old enough to have the real life experience and the information they need hadn’t been taught to them at school.

This is one aspect of an education that will be part of the adult life of all students.

What’s the first thing many kids want to do when they leave school? They want to be independent, buy a car, arrange a holiday and perhaps take some time off to travel, all of which costs money.

Depending on whether they have a job and saved the money or their parents have provided some assistance, kids will more than likely want to spend more than what’s in the kitty.

Credit cards, interest-free and cash fast offers are readily available and promoted heavily.

By providing school leavers with real life examples of the value of paying their bills on time, the dangers of credit cards at 19% and what to be wary of with interest-free or fast cash offers will be a platform to make better financial decisions.

 

By Paul Ryan