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CNBC
5 days ago
- Business
- CNBC
On-time debt payments aren't a magic fix for your credit score, experts say. Here's why
Americans have a near-record level of credit card debt — $1.18 trillion as of the first quarter of 2025, according to the Federal Reserve Bank of New York. The average credit card debt per borrower was $6,371 during that time, based on data from TransUnion, one of the three major credit reporting companies. Many people don't understand why a common strategy that can help them pay down that debt — paying bills on time — isn't all it takes to improve their credit. Separating fact from fiction is essential to help you pay down debt and raise your credit score. Here's the truth behind a common credit myth: Your credit score is a three-digit numerical snapshot, typically ranging from 300 to 850, that lets lenders know how likely you are to repay a loan. The average American's score is 715, according to February data from scoring brand FICO. Here's what you need to know about on-time payments and your credit: "You may be paying rent-to-own, private school tuition, utilities, or internet payments on time every month, and you think it helps your credit score," said Yanely Espinal, director of educational outreach for financial literacy nonprofit Next Gen Personal Finance. "But a lot of these are not traditional payment types and are not reported to the credit bureaus — so there's no impact." For example, making on-time payments on buy now, pay later, or BNPL, loans may not help your credit score, even though 62% of BNPL users incorrectly believe they will, according to a new LendingTree some BNPL providers do report certain loans to the credit bureaus, this is not a universal practice. And BNPL users may see a negative credit impact if they fall behind. "Some BNPL lenders will report missed payments, which can hurt your score," said Matt Schulz, chief consumer finance analyst at LendingTree and author of "Ask Questions, Save Money, Make More." An easy way to check what payments are and aren't influencing your credit: take a look at your credit report. You can pull it for free, weekly, for each of the major credit reporting agencies at While payment history can account for 35% of your score, according to FICO, it's not the only factor that matters. How much you owe relative to how much credit you have available to you — known as your "credit utilization" — is almost as important, at about 30% of your score. Higher utilization can hurt your score. Aim to use less than 30% of your available credit across all accounts, credit experts say, and keep it below 10% if you really want to improve your credit score. A 2024 LendingTree study found that consumers with credit scores of 720 and up had a utilization rate of 10.2%, compared with 36.2% for those with credit scores of 660 to 719. "Don't settle for B+ when you can go for the A+," said Espinal, who is also the author of "Mind Your Money" and a member of the CNBC Global Financial Wellness Advisory Board. "You want to use less than 10% to really boost your score significantly."
Yahoo
01-05-2025
- Business
- Yahoo
This One High School Class Could Be Worth $100,000 Over A Lifetime
It's not often you hear about a single high school class making a six-figure difference in someone's life. But according to new research, one course — personal finance — could be worth roughly $100,000 to students over their lifetime. And it's not just theory. Real data shows that learning about money early on can lead to better financial decisions, stronger credit scores, and even more wealth down the road. Don't Miss: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Can you guess how many retire with a $5,000,000 nest egg? . A 2024 report from consulting firm Tyton Partners, in collaboration with nonprofit Next Gen Personal Finance, found that taking a one-semester personal finance class can lead to a lifetime benefit of about $100,000 per student. The calculation factors in things like avoiding costly debt, securing better loan rates, and smart investing habits. And with more young people jumping into investing — even during rocky markets — this kind of education is becoming even more valuable. "We say it's $100,000 but as we start to see more and more young people investing, that number is only going to increase," Tim Ranzetta, co-founder and CEO of Next Gen Personal Finance, told CNBC. Trending: BlackRock is calling 2025 the year of alternative assets. It turns out that a little bit of financial knowledge goes a long way. The Tyton Partners report shows that students who take personal finance courses are: More likely to avoid carrying credit card debt Better equipped to get lower-cost loans and grants for college Able to build stronger credit scores early in adulthood The Financial Industry Regulation Authority reports that 66% of Americans are financially illiterate. Young adults with a background in personal finance education tend to have better credit scores and lower debt delinquency rates. It's not just about avoiding mistakes, either. "Teaching students about the financial markets is the greatest asset for building wealth," Yanely Espinal, director of educational outreach at Next Gen, told good news? More states are catching on. As of early 2025, 27 states now require high school students to take a personal finance course before graduating, according to CNBC. Kentucky recently became the newest to join the list. On top of that, Next Gen's Bill Tracker shows that there are currently 44 financial education bills pending in 17 states that could expand access even further. Still, learning gaps remain. A report by Junior Achievement and MissionSquare Foundation found that about 42% of teens are "terrified" they won't have enough money in the future — and shockingly, 80% have never heard of a FICO score. Plus, 43% of teens believe that an 18% interest rate on debt is manageable and can be paid off over time. "It's kind of hard to get ahead in life if that's how you manage your finances when you get out in the adult world," Ed Grocholski, chief marketing officer of Junior Achievement USA, told CNBC. While legislation helps, experts stress that simply requiring a class isn't enough. Schools need well-trained teachers and strong, practical curriculums to really make an impact. John Pelletier, director of the financial literacy center at Champlain College, told CNBC that it would take about 23,000 trained educators to properly teach the 9.2 million public high school students currently enrolled in states with financial education mandates. In the end, investing in financial literacy isn't just about helping individual students — it could shape the entire economy for the better. Read Next:Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article This One High School Class Could Be Worth $100,000 Over A Lifetime originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
