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18/05/2012
Generous Parents Hurting Grown-Up Children's Credit Rating
Free credit report service Noddle has warned that parents are inadvertently placing their adult children at a financial disadvantage by taking out credit and paying essential bills on their behalf.
They have said that by putting credit agreements, mobile phone contracts, call loans, credit cards and even mortgages in their own names they are preventing their children from developing a credit record.
This has given rise to an estimated 7 million "credit virgins" who have never taken out any form of credit, and makes it more difficult for them to secure loans, mortgages and credit cards in the future, even if they are able to afford them.
In a survey of 2,000 adults, 40% of 20-somethings, 18% of 30-somethings and 22% of 40-somethings had no credit record. The Noddle study suggests the rise in stay-at-home university students, high youth unemployment and prohibitive housing prices are exacerbating the problem.
Noddle founder Tom Ilube said: "Parents have nothing but good intentions when they decide to help out their kids by putting credit agreements in their names and covering living costs, but the irony is they could be putting them at a financial disadvantage in the longer term."
The research showed that two-thirds of parents (63%) provide financial support to their adult children, handing out an average £3,632 each in the past 12 months, while one in 10 say they make monthly payments of £240 to their grown-up kids to cover day-to-day living costs.
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They have said that by putting credit agreements, mobile phone contracts, call loans, credit cards and even mortgages in their own names they are preventing their children from developing a credit record.
This has given rise to an estimated 7 million "credit virgins" who have never taken out any form of credit, and makes it more difficult for them to secure loans, mortgages and credit cards in the future, even if they are able to afford them.
In a survey of 2,000 adults, 40% of 20-somethings, 18% of 30-somethings and 22% of 40-somethings had no credit record. The Noddle study suggests the rise in stay-at-home university students, high youth unemployment and prohibitive housing prices are exacerbating the problem.
Noddle founder Tom Ilube said: "Parents have nothing but good intentions when they decide to help out their kids by putting credit agreements in their names and covering living costs, but the irony is they could be putting them at a financial disadvantage in the longer term."
The research showed that two-thirds of parents (63%) provide financial support to their adult children, handing out an average £3,632 each in the past 12 months, while one in 10 say they make monthly payments of £240 to their grown-up kids to cover day-to-day living costs.
(H)
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