Credit scores for children as financial education game goes to next level

Banqer, Kendall Flutey's system, helps children learn how adults build wealth, and sometimes lose it.
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Banqer, Kendall Flutey's system, helps children learn how adults build wealth, and sometimes lose it.

For the first time school children are going to be credit scored, but it's not because lenders are seeking younger borrowers.

It's all in the name of education, with credit reporting bureau Equifax having become a sponsor of Banqer, an online system being used by 700 classes in schools around New Zealand.

Banqer was founded by Kendall Flutey in a bid to use "gamification" to deliver financial education in a way that doesn't cause youngsters' eyes to glaze over.

It provides an online virtual world in which children, overseen by their teachers, can earn, borrow, and buy assets like homes to help them learn how adults build wealth, and sometimes lose it.

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But there's been one element missing. The children's money successes and blunders haven't resulted in them being credit scored.

On Monday, that changed.

In a launch at Murray's Bay Intermediate School in Auckland, Banqer and Equifax released the game upgrade that will see children using Banqer learn about credit scores and credit reporting.

Adults in the real world are given credit scores from zero and 1000 depending on how well they manage their money lives, with their banks, power companies and insurers all feeding information to credit reporting bureaus like Equifax and Dun & Bradstreet.

Now children using Banqer will find the same happening to them, with their scores going to zero if their financial gaming ends in virtual bankruptcy.

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"Learning about credit reports, credit scores, credit worthiness and allowing students to see the real-life implications of their financial decisions is essential if we want to build a more financially literate nation," said Carol Chris, Equifax's New Zealand managing director.

"By working together (with Banqer) we will be helping our young New Zealanders understand the importance of a good credit history from an early age."

Some of the learning may even rub off on the children's parents.

"We know that Banqer's existing learning platform is very popular among schools and that Kiwi kids enjoy the simulated learning environment. As a result, students are now sharing their knowledge with peers and family."

As with adults' real-world credit scores, the children's will be calculated depending on both positive behaviours such as making timely repayments, and negative ones, such as missing a bill payment.

And as with adults, each of the children will be able to check their credit report.

"The report also suggests ways in which a student can work to improve their credit score, along with the rationale why," Chris said.

"This is a particularly important element of the module as it demonstrates that recovery is possible with better financial decisions and planning for unexpected events."

It's become much easier for adults to check their credit scores and reports after the launch last year of Credit Simple, a company owned by Equifax rival Dun & Bradstreet. It lets people check their scores and reports online for no charge.

In Australia, Equifax offers the Getcreditscore online service allowing people there to check their scores for free, but it is not available here, and Chris would not say whether there were plans to offer it the New Zealanders.

 - Stuff

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