With the 12.21.12 apocalypse avoided and the New Year upon us, it’s a good time to think about goals and resolutions for 2013. In that spirit, I would like to propose a resolution for the financial industry in 2013—let’s make credit education sexy.
I recently came across an article in the New York Times talking about the newest question that is cropping up during first dates—“what’s your credit score?” Apparently, somewhere between “where did you go to school?” and “where do you work?” more and more people are assessing their potential romantic partners according to the quality of their credit scores.
The logic behind this trend seems to be that, post-recession, people are increasingly considering more pragmatic factors like credit scores in all of their decisions, including who to date. According to the New York Times, this trend has come as a surprise to many single adults who never imagined that the attractiveness of their credit history could be a dating deal breaker.
That is exactly why we need a renewed commitment to credit education in 2013. If credit scores really are becoming the “dating equivalent of a sexually transmitted disease test” as the NYT article claims, then we owe it to young adults to provide some preemptive education.
At Zoot, we built a successful credit education program around two simple ideas:
- If young adults understood the consequences of using credit irresponsibly; they would be less likely to be irresponsible.
- Credit can be a valuable tool, if it’s used correctly.
To drive home these ideas, we focus first on illustrating the consequences of using credit irresponsibly in pretty graphic detail—having your card declined at a restaurant, paying tens or thousands of dollars in extra interest payments, not being able to buy that cool new car. By focusing on the consequences first, we found that students were then much more willing to listen to the tips and tricks we have for using credit responsibly. We then drive home our second point; that credit products can be incredibly valuable if used wisely. We talk about having the ability to purchase expensive things like a car or a college education, we talk about the rewards and perks that can come with credit cards, and we talk about the social prestige that comes with having a great credit history (which apparently can now lead to a better chance at a second date). By focusing on the positives, we make the idea of using credit responsibly more attractive.
We can’t shield consumers from every bad deal they may be offered. We can’t forcibly prevent them from making poor financial decisions. As much as we might try with restrictions like the under 21 rule in the CARD Act, we can’t legislate irresponsibility out of our financial system. What we can do is equip consumers, particularly young adults, with the information they need to make smart financial decisions for the rest of their lives.
We need to make credit education sexy and we have an opportunity, in a world where a low credit score is becoming an increasingly unattractive quality, to do just that.