Millennials, or people born between 1982 and 2002, are far less likely to get a credit card than the Baby Boomer generation that came before them. While this may seem like a safe way to manage your finances, it’s much harder to build significant credit without a credit card. First-time homebuyers may have difficulty attaining a Kansas City home loan without a significant credit score even if they’ve avoided falling into debt. Before you write off using a credit card to manage your finances, be sure you understand the credit benefits of taking on a reasonable amount of debt.

Millennials vs. Baby Boomers: A Shift in the Housing Market

Millennials are much more debt-aware than the Baby Boomer generation before them. Not only have many Millennials come of age with more debt from student loans, but they also grew up during a financial crisis brought on by people borrowing more than they could pay back. As a result, many Millennials are wary to take on credit cards for fear of falling into debt. This difference between generations is one of the reasons fewer Millennials have purchased homes than Baby Boomers: their credit history doesn’t qualify them for Kansas City home loans.

Debt vs. Credit: A Misconception

“Debt” and “credit” are not interchangeable terms. Debt is the amount of money you are financially responsible for and expected to pay off over a given amount of time. Credit is your ability to acquire debt. Put simply, you can prove you can pay off a large debt (i.e. a Kansas City home loan) by first paying off smaller debts. One of the easiest ways to accomplish this is by using a credit card.

Changing Credit-Scoring Models

While credit cards are highly recommended for Millennials preparing for a Kansas City home loan, some standards are changing to favor this new group of cautious first time homebuyers. For instance, the government recently allowed rent payments to affect a person’s credit score.

Get Help with Your Credit Score Today

Contact a Cornerstone Loan Officer at 800-965-9910


The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.