The average millennial credit score is 625, and 28 percent of them are ranked below 579, says NerdWallet, a personal finance website. In the world of credit scores, anything above 660 (out of 850) is considered good.
Based on millennial credit habits, those scores may not improve.
Among the key issues: Some millennials (18-34-year olds) are shunning credit cards completely after hearing so many debt-related horror stories from the financial crisis. Others are applying for the wrong cards and getting rejected.
"Millennials are misunderstanding, or are simply unaware of, the benefits of credit cards," says Sean McQuay, NerdWallet's resident credit card expert.
A recent study by Experian found that millennials are making student loan debt more of a priority. That's in contrast to the previous generation, Gen X, which prioritized getting credit cards.
About a third of millennials have never even applied for a credit card, NerdWallet says. That means they are not building credit and will have a hard time when they need a credit history.
Millennials' avoidance of getting into the credit card game will cost them in the long run. For example, you need a solid credit score to rent an apartment, get the best insurance rates or just get a loan.
Credit scores are even sometimes used to vet job candidates these days. Credit history is key for making grownup purchases - and the length of that history is a big part of your credit score.
The good news is that the majority of millennials have applied for a credit card. But when they do apply for credit, about half (48 percent) are motivated by an advertisement or promotion, according to NerdWallet's research. That can lead to a bad fit.
For example, a millennial who doesn't drive should not apply for a gas card. Credit cards are not one size fits all.
Ironically, NerdWallet's study found that millennials with the lower FICO scores - between 300 and 579 - are applying for credit the most. Not surprisingly, they also get approved less frequently.
Getting credit for the first time needs to be done strategically. Here's why: when a consumer applies for a new credit card, his credit score gets what is called a "hard" credit inquiry. The more inquiries a consumer has, the riskier he or she appears to be to lenders, and that in turn lowers his or her credit score. If you are starting out cold with no score, that gets amplified.
"A good rule of thumb is to wait six months to a year between card applications," says McQuay.
NerdWallet recommends Millennials take advantage of the free FICO scores now offered by many credit card issuers. A full list can be found here (http://www.nerdwallet.com/blog/credit-cards/credit-score/credit-cards-give-free-fico-scores/).
Other potential sources for this information for some student borrowers include Sallie Mae, along with credit counselors.
A common pitfall to avoid: store credit cards, which often come with an initial discount off items purchased. "They say 'Do you want to save 10 percent?' and my answer is always only if you don't run my credit and that ends the conversation," says Cary Carbonaro, author of "The Money Queen's Guide."
Your credit score goes down the more you shop for credit and keep adding outstanding credit lines, Carbonaro notes.
Carbonaro's advice is to apply for low-limit cards and charge small amounts on a regular basis. Pay off your bills every month and slowly build a credit score.
Be careful of rewards cards, too. Or at least do the math before you sign up. The average annual fee on a reward card is $58. The average reward rate is 1.14 cents per point. You have to spend $5,088, just to earn back your annual fee. If that's not likely to happen, it is better to go for the no-fee card, especially since almost one in five people did not redeem any of their rewards last year.
Paying cash for everything may sound great. But, like it or not, you need credit to establish yourself in the financial world. It's better to reward yourself with a strong credit history.