“Credit history is only established when a college student is building credit in their own social security number without a co-applicant or cosigner.”
As a early supporter, expert witness and co-author of US House of Representative’s Bill HR 627, the CARD Act, I can provide expert credit insights that impact many young adults’ credit score.
These opinions are my own and not those of my employer, Duck9. It is number one in selling credit cards to college students. As CEO of Duck9, I went against the industry grain in my support of a law that would protect young adults from overly aggressive credit card sales efforts. Here are testimonies that I will be giving before congressional committees and subcommittees on banking, insurance, commerce and credit:
-1- Sallie Mae, Duck9 and Gallup Survey Data
A Q4 poll by Duck9 shows a 23% drop in the number of college students who have owned credit cards since 2009. A survey by Gallup and Sallie Mae reported a higher drop at 27 percent. The disparity in the two rates is caused by the discrepancy in quality of four-year institution.
Schools on the less competitive side of the bell curve with lower Barron’s rankings, have students that the CARD Act severely inhibit. An college administrator that wished to remain anonymous said, “Students from lower tier colleges have nearly no credit access. This leads to low FICO scores and diminished access to jobs where employers pull credit reports.” This is supported by…
-2- Credit Bureaus Confirm
Credit bureaus confirm Duck9′s data collected from the distribution list of 1,100 colleges. Experian, Equifax and Trans Union show credit card balances for 18- 24 year olds is growing at a slower pace: 0.2 percent in 2011, 0.4 percent in 2010, 2.4 percent in 2009, 12.3 percent 2008 and 13.3 percent in 2007.
-3- CARD Act Spirit
In 2007, the average number of college credit cards a college student had was 2.7. The spirit of the CARD Act was to curtail overzealous marketing. The unintended consequences of the CARD Act resulted in college students from below average college institutions, like the University of Illinois at Chicago, to get zero credit cards and zilch in their credit file. Credit history is only established when a college student is building credit in their own social security number without a co-applicant or cosigner.
-4- College Administrator Burden
Having a significant chunk of their undergrad populations with zero credit file (27% or 23% depending on quality of school) is a college administrator burden. Students who interview on campus during job fairs and interviews will have companies that pull credit files. 90++% of employers run credit checks as part of background checks before employment offers can be made.
-5- Open Sourcing Intellectual Property and Proprietary Business Art
At Duck9, each engineer is allowed to own the advancements made. Technically, I am an engineer, in addition to being CEO. Well, as an engineer, I am going to ‘open source’ the process that specifically gets a in-bound, incoming freshman to graduate with a FICO score over 700. These steps are clearly available today in the Duck9 blog and available for college administrators to execute.
I hope this evens the playing field for college undergrads and gets all college students to a FICO credit score in the 90th percentile. Engineers don’t let engineers graduate from Stanford University without street smarts. This engineer won’t let any undergrads graduate with a FICO credit score below 700.
