When a person turns 18, they are a brand new entity in the world of credit. Suddenly able to hold a credit card in their own name and take out loans, every 18-year-old must start their credit score fresh with no history or previous scoring. In widely banked communities, parents often help their newly adult children get their first credit card and even take out their first car loan to start working or head to college with. These teens often have very little trouble building a decent credit score within a single year if they are smart with their money.
Reaching Underbanked 18-Year-Olds
However, fresh new adults in underbanked communities are likely to remain un-credited and without a real credit score for years into the future. Banks have a lot of power here to reach out to these young adults who are not just new to the financial world, but likely ready to try new things and branch out in ways their parents never did. By offering opportunities and emphasising the importance and convenience of your services, you may be able to induct much of an underbanked community into the financial world through their newest generation of young adults.
Working with High Schools and Employers
The first thing to consider is how you will reach these 18-year-olds in their moment of entry into the financial world of adulthood. Because their parents do not use banks or do not value banking as something to introduce their kids to, you’ll need to go through channels other than the parents. Your best bet is to reach out through high schools and local entry-level employers.
Outreach Through High School Economics Classes
High schools with 18-year-old seniors may be interested in helping get these kids onto a profitable life track if you make the pitch correctly. Consider approaching via financial education, perhaps even offering to send some of your professionals to speak in the high school economics classes as a guest in order to emphasise the importance of building a credit score early. Pair this with handouts inviting all high school 18-year-olds to open accounts and secured cards and you’ll get banked and underbanked students alike who are interested in starting their new financial lives on the right foot.
Outreach Through Local Employers
You can also reach out through local employers who accept teens as staff members. Often, teens in underbanked communities get jobs in high school or soon after and local businesses may be interested in helping you introduce them to the greater financial world. With incentives, many employers will be happy to pass along your offers or even provide some in-line financial training supported by your bank for the teens in their employ.
Send Birthday Offers for Low-Limit or Secured Credit Cards
If you have a list of contact information or received it from a local source, birthday greetings are a fantastic way to encourage newly 18-year-olds to consider starting their credit score building process as early as possible. Consider sending offers for low-limit or secured credit cards with a pamphlet that explains how these products are designed to safely help teens with jobs get a head start on financial success.
Be sure to provide all the information on how a secured credit card works and how to use it to the best possible benefit for students. And consider throwing in an actual birthday gift as well. Perhaps a gift card or a special bonus when the account is opened to help them celebrate their birthday in the moment.
Provide Credit-Builder Loans and Paired Savings Accounts
Credit-builder accounts are another great product to offer savvy but underbanked teens who have just reached legal adulthood. The key is to pair your credit-builder loans with a savings account that can be filled, much like a secured credit card, so that loan payments can be automated and the young adult automatically pays off the loan even though they are new to both finances and banking. Credit-building loans are like debt on training wheels, secured with the savings account.
As a bonus, in opening a savings account to manage their credit-builder loans, the newly 18-year-olds you reach will then have an account to build on with your bank. They may well open a checking account with you and a long-term savings account in addition because they have become familiar with your app, with watching how money moves from one account to the other, and because your bank was the one to nurture their burgeoning understanding of online banking.
In the widely banked mainstream population, you can count on parents to induct their 18-year-olds into bank accounts and credit cards. But for underbanked populations, your outreach can make a huge difference in helping the youngest generation of adults jump immediately into building credit scores, opening bank accounts, and growing their financial success early in life. And they will pass that knowledge on to their community, younger siblings, and even their parents if given a chance. All you have to do is build supportive credit-building offers and find local ways to reach out.
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