Credit is a fact of life in our society. Most Americans enter into a lifelong relationship with credit from a young age with their first auto or educational loan. By offering loans to minors, credit unions can help their young members enter into their “credit life” prepared with knowledge and experience.
I know that with all of today’s economic and credit problems, many would wonder why in the world we would want to encourage youth to start their credit life off early, encouraging them to borrow while still a minor. Haven’t we seen enough young people who fall too easily into credit problems once they turn 18 and start getting the credit card offers? Aren’t we supposed to be encouraging saving rather than credit to help combat the credit problem?
We see so many people struggling with perpetual credit problems due to early and ongoing credit mistakes. People who are caught in a cycle of overextension, who have difficulties keeping up with credit bills, are unable to utilize their income to save and invest in order to get ahead and create personal wealth. Early lending experiences, coupled with credit and saving education, can help youth learn and practice responsible borrowing, making them more prepared to avoid future credit problems.
Now is a good time to promote youth lending/credit education to your young members and their parents. The current economic problems are making youth (and parents) very concerned about their future “credit life”. Youth lending programs can give young members a solid background in the wise use of credit and create valuable lifelong credit union members.
The Financial Education Council of the MCUL offers an updated “Youth Loan Manual – Guidelines for Success” to help credit unions get started or improve their youth lending programs. This manual is available free to download at: http://www.mcul.org/files/cucorp/744/file/YLM%202009.pdf
Even with the current economic situation, there are still many creditors out there hungry to offer youth their first loan or credit card. Do you want your young members entering into credit relationships with them or do you want to provide them a safe, structured environment to learn how to use credit responsibly? If you start your members off early with a youth lending program, coupled with safe, sound credit parameters you can provide yourself with young, loyal, and responsible borrowers.
I’d like to hear your successes and struggles with youth lending – please share them on this blog or contact me. And for more information, join us as we explore the manual and other aspects of youth lending with a session at the MCUL’s Lending Conference in February – http://www.mcul.org/2009_Lending_Conference_1921.html
Keywords: credit, financial education, youth lending