COSTA MESA, Fla. (4/3/14)--A big step in a young person's personal finance journey is obtaining credit--and that step represents an educational opportunity for credit unions. Fortunately, Millenials appear to be onboard when it comes to taking responsible first steps in making credit decisions, according to a new survey.
Nine in 10 Millennials are familiar with co-signing, and nearly two thirds used a co-signer in the past, according to a new survey from Experian Consumer Services. In addition, results show that Millennials look to their parents to co-sign on their behalf.
Three in four Millennials report they would ask their parents to co-sign for them in the future, and 77% say their parents likely would agree. Even though they feel confident they could keep their accounts in good standing, 87% of respondents say they would consider how their financial actions might impact their co-signer's credit.
"In today's market, young adults will likely need a co-signer at some point and will turn to their parents for help," said Ken Chaplin, senior vice president of marketing for Experian Consumer Services. "Since the co-signer guarantees the person for whom they are co-signing will repay the debt on time and in full, it's important that both parties understand repayment expectations and communicate guidelines so they can be confident in their credit decisions."
Survey results indicate that two in three Millennials needed a co-signer in the past, which most often was for college loans (35%) or residential leases (32%). Other reasons Millennials need a co-signer include car loans (19%); legal agreements for credit cards (17%); car leases (11%); or home loans (6%).
Of respondents who reported having used a co-signer for a loan or a lease, the majority handle the responsibility of credit well, paying off their account in good standing or keeping it active in good standing. The net total of contracts reported in bad standing due to late payments, with missed payments or in default is 8%.