The report looked at three groups of people encompassing four generations: Millennials (ages 19-34), Generation X (ages 35-49), and Baby Boomers/Greatest Generation (ages 50-87). While the national average Experian credit score was 667, Millennials had an average score of 625. Generation X came up with an average score of 650, and the older folks had the highest average score, with 709.
Experian scores are calculated according to several factors: payment history, length of credit history, debt-to-available credit ratio, types of credit used, and amount of new credit issued. They range from 300 to 850, with anything below about 650 being viewed as subprime, or poor credit. A score in the 700s or higher is the most desirable, and leads to better interest rates and higher approval rates for auto loans, personal loans, and mortgages.
Younger folks, higher debts
The younger generations were more likely to carry heavier debt loads as well. Not counting mortgages, Millennials carried an average of $26,485 in debt. Generation X carried an average of $26,670, and the older folks—Baby Boomers and the Greatest Generation—had only $23,089 in average debts.
When it came to ability to pay off those debts, Generation X appeared to have the edge, with the highest average income. Millennials income averaged $34,430, Generation X had an average income of $50,400, and the older two generations averaged $46,340 in annual income.
Michele Raneri, vice president of analytics for Experian, said Millennials are using credit as a tool and still finding their feet when it comes to financial savvy. “While this generation may not look like they are on the right track financially, it's important to keep in mind that credit scores are built on credit experiences,” said Raneri. “While this generation has been slower to use credit, they have plenty of opportunities to build a positive credit history. The best way to do that is to understand credit before using it."
Generation X and Millennials: more student loans, more auto loans
Some of the differences between Millennials and the generation that came before them include: among Millennials, auto loans made up 14% of all recently opened accounts. For Generation X, auto loans only accounted for 1% of all loans in 1998, when they were the same age. Millennials also carry more student loan debt; student loans make up 24% of all new accounts, compared with 20% for Generation X at the same life stage.
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