EVERETT — High school senior Melanie Gomez has big plans after she graduates, including applying for a credit card.
Gomez, 17, cemented her decision after a local banker visited her class at Mariner High School in Everett and talked about the importance of establishing a credit history.
Everything in the U.S. revolves around credit, said Jonnathan Yepez Carino, vice-president at a Marysville financial institution told Gomez and other Mariner students.
Carino volunteers his time and expertise at local schools and community centers, offering tips on personal finance.
“If you want to get an apartment you need credit, if you want a student loan or a house or car — you need a credit history,” Carino told students.
Gomez plans to apply for a credit card when she turns 18 next year. “Paying on time is one way to raise your credit score,” she said.
Consumers can apply for credit cards at age 18, but the law requires they have their own income or a co-signer. Most major issuers, however, don’t allow co-signers anymore. Someone aged 18, 19 or 20 typically has to prove they have their own income before being approved, according to a Nerd Wallet report.
“A young adult who gets a full-time job right out of high school, for example, might qualify,” the report said.
By age 25, three-quarters of Americans have a credit card. In all, 85 % of adults have a credit card, a 2023 Forbes report said.
Who better to teach financial literacy than local bankers?
Melissa Siv, vice president and district branch manager at Peoples Bank Everett Financial Center in downtown Everett, is another banker who volunteers her time and teaches financial literacy at Snohomish County schools.
It’s important to introduce young adults to money management principles before credit card offers flood their inboxes when they turn 18, Siv said.
Just 57% of adults consider themselves financially literate, according to a 2022 Standard and Poor’s survey.
It’s not just the lack of understanding finance that’s concerning. Failing to grasp the fundamentals of finance can cost big bucks over the long run — from racking up credit card debt to paying thousands of dollars more for a home loan due to a low credit rating.
The remedy, experts say, is to teach money management while people are still in school, and before they make big financial decisions.
Auliilani De La Cruz, a teacher at Mariner High School in Everett, agrees.
“Even if you’re not sure of your path after high school, you’re going to have to live somewhere, have a job, make money,” De La Cruz told students.
‘Had a credit score of 400’
For Carino, age 29, it’s personal.
Ten years ago, his credit score was considered ‘poor.’
“I think I had a credit score of 400,” said, Carino, 29.
That changed when he began a banking career, nine years ago.
He paid attention when co-workers explained the fine points of checking accounts, loan applications and credit checks to customers.
“I didn’t start looking into being financially stable, saving for retirement or housing until I started working at a bank,” Carino said.
Within a few years, he raised his credit score — high enough to buy a home at age 23.
“I wish someone had talked to me about this when I was young” he said.
When Mariner teacher De La Cruz recently asked seniors what they wanted most before they graduated — they answered: advice on personal finance.
De La Cruz called Carino, a former student, who offered guidance.
“A lot of my students are going to be first generation college students or professionals,” said De La Cruz, who teaches a course geared toward students who’ve traditionally been underrepresented in the STEM fields.
Applying for an apartment or a job? Landlords and some employers routinely check credit scores, Carino told students.
Planning to attend college or technical school? Buying a car or home?
“Your credit history determines how much a bank can lend you,” said. A good score you can get you better terms on a loan, which can translate into lower interest rates or a lower monthly payment, he explained.
“Interest rates are up right now,” he said. “If you have a low score they get boosted even higher.” (The average interest rate on 30-year fixed mortage is currently 7% according to Bankrate.com)
Carino also hopes to bridge the racial and ethnic wealth gap that has kept some communities from accessing credit, home ownership and building generational wealth.
Immigrants from some countries don’t trust banks or the concept of buying on credit, said Carino who offers financial literacy instruction in English and Spanish.
Building community trust is essential, especially in Black, Latino and Hispanic communities, Carino said.
According to the National Low Income Housing Coalition, 40% of Black adults and 30% of Hispanic adults either don’t have a bank account or have a bank account but also use alternate sometimes costlier and less secure financial services such as payday loans, check cashing services and pawn shop loans, the coalition said.
“In a lot of cultures, people don’t talk about finances, because it’s meant to be a private affair,” said Johanna Redmond, an instructor at BankWork$, where Carino has been a volunteers. BankWork$ offers online courses in financial literacy and banking practices for people interested in banking careers.
“People come to the United States with no credit because it wasn’t something that was part of their home countries,” Redmond said. “Understanding credit reporting and how to build credit is crucial if you want to buy a home or even rent an apartment or sometimes even get a job.”
Without a basic understanding of person finance, you can get in a lot of trouble, she said. “My parents just signed college loan papers for me. I didn’t know what I was getting into. I racked up credit card debt paying for books and other things and then realized, ‘Wait! I have to pay this off.”
Pick a lifestyle
Pick a car and a home. Now check to see if your job or career choice can support your lifestyle: What’s your income and can you afford this? — that’s a scenario Peoples Bank executive Siv likes to give students.
(We should all try this exercise!)
Their answers can be eye-openers, Siv said.
Some realize they’ll need an extra job to help pay for their dream house or car, Siv said. Others reconsider or re-tool their lifestyle choices.
“One student said he’d live in his car if it meant having an extra nice vehicle,’” she recalled. “I think — I hope he was trying to be funny! ”
Setting up a bank account, cashing checks, making deposits, establishing good credit and using a debit card responsibly are some of the topics she covers.,Siv said.
That includes knowing your protections, she said, “because there’s a lot of fraud out there.”
“It’s easy to see cool ads on your phone and enter your credit card information thinking it might be safe,” Siv said. “Then, suddenly you’re getting monthly debits from a company or group you weren’t expecting and you never receive the product.”
At age 18, you may be eligible for a credit card, she said.
“If you don’t have a credit history, getting a card will help you begin to establish one,” Siv said. “That’s important when it comes time to rent an apartment or apply for a home mortgage.”
But go easy on the card count and the amount you charge, she said. “It’s easier to damage your credit score than to build it.”
The financial literacy curriculum that Siv and her colleagues offer can be tailored to any grade level. Designed by Junior Achievement, it is vetted and approved by state school standards, Siv said.
Siv hopes more parents and educators will take advantage of the program.
“It’s a matter of trying to get teachers aware of what we offer. Most of the time they just don’t know about it,” Siv said. “There are more volunteers waiting than we have schools to fill.”
Credit card tips
• Pay on time. Paying your credit card account on time helps you avoid late fees as well as penalty interest rates and helps maintain a good credit record.
• Stay below your credit limit. Most bankers say you should keep your balance at about 30% of your total credit limit. If your credit limit on a card is $1,000, charges should total no more than $300. The rule applies to all your credit cards. If you have three credit cards each with a limit of $1,000, ($3,000) your total balance on all three should be no more than $1,000.
• Pay more than the minimum payment.
• Watch for changes in the terms of your account
• Checking your credit score will not lower it. Checking your credit reports and credit scores ensures that your personal and account information is correct, and may help detect signs of potential identity theft.