Media Release

falling into credit trapYoung people falling into the credit trap.

20 June 2013

A recent national survey revealing a higher rate of financial exclusion amongst 18-24 year olds shows young people are in dire need of more financial education to act as a buffer against the current economic difficulties, according to a consumer credit advocate.

MyCRA Credit Rating Repair CEO, Graham Doessel says the National Bank of Australia and Centre for Social Impact’s recent report on Financial Exclusion in Australia reveals a real problem with our young people around financial services.

“The report shows the 18-24 age group has a low rate of mainstream credit,” Mr Doessel says.

“This age group is either not applying for credit cards and loans, or they’re not meeting the bank’s requirements for these products due to low income, or bad credit habits such as defaults.”

The report, Measuring Financial Exclusion in Australia released late last week, shows on the whole more than three million Australians don’t have a basic transaction account, a moderate amount of credit, or don’t have general insurance.[i]

The report shows the problem of financial exclusion is growing – with the percentage of the Australian population excluded from these services rising from 15.6% to 17.7% over the past two years.

But credit take up in the 18-24 year age group was worst, at only 11.2%, compared with 56.5% in the 50-64 age group.

“Although demand for credit and insurance may be slightly lower amongst the segment of the population aged 18-24, their lack of access to mainstream products makes this group vulnerable to predatory lending products and to the loss of uninsured assets.”

“It also appears that once consumers have gained access to credit or insurance, they keep it…It is possible that difficulties in entering the financial services market have a greater impact on financial exclusion than difficulties in maintaining products,” the report states.[ii]

Mr Doessel says quality education is paramount to bridging the gap and ensuring the young people of today have access to mainstream credit in the future.

“We need to consider the massive changes that have and are taking place in our finance systems in Australia and address whether we are successfully educating our school children and young adults in how to best work within that system,” he argues.

He says young people should not have to learn the hard way how to be credit savvy.

“Most young people don’t understand the ramifications of having basic credit such as mobile phone plans and electricity accounts, and that mistakes with this type of credit can see them blacklisted for five years from credit cards and home loans,” he says.

He says the importance of better credit education for young people is two-fold.

“With the current first home buyer figures low in comparison with other portions of the population there could be a link between the low rate of mainstream credit and subsequent low first home buyer figures,” he purports.

“If young people start using high interest or payday loans they can end up being locked into this type of credit, through mainstream lenders avoiding this type of borrower, or through being unable to pay back the loan under difficult terms.”

The Measuring Financial Exclusion in Australia survey found that while there are a range of initiatives relating to basic banking, matched savings, access to credit and financial literacy available in Australia, many of these programs are relatively modest in terms of scale, and all programs are subject to funding and sustainability pressures.

“Overall, the efforts to address financial exclusion in Australia appear to be dwarfed by the scale of the problem. Alternative and innovative approaches to microfinance products, distribution and support services need to be investigated to meet the growing levels of financial exclusion, in a way that is sustainable,” the report states.

Financial education was rolled out as a trial in secondary schools in January this year, but Mr Doessel says it is a case of too little too late for the young people trying to navigate the credit system today.[iii]

“This program should have been implemented ten years ago. It could also go much further, including basic legal responsibilities and requirements for obtaining credit and smart choices around choosing credit,” he says.


Please contact:

Graham Doessel – Ph 3124 7133

Lisa Brewster – Media Relations

Ph 07 3124 7133 Stafford Rd, STAFFORD Qld

MyCRA Credit Repair is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files.






Image: Stuart Miles/

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