Earning good credit requires responsible borrowing behavior, including paying on time and having a good credit mix. Most Americans are doing OK at this. Research from The Ascent shows the average FICO® Score across the United States is 714. The scoring scale goes up to 850, so a 714 score is classified as “good,” although not “very good” or “exceptional.”
Good credit allows you to get approved for most credit cards and gives you a better chance of qualifying for other loans at favorable rates. The average American has a score that should allow them to do business with most companies, but there’s still variation in how consumers fare score-wise.
In fact, the data shows there are some pretty big gaps between the average scores of older and younger Americans. To better understand this discrepancy, let’s take a look at which generation has the highest and lowest scores.
A look at credit scores by age shows one generation is the clear winner
According to The Ascent’s research, the silent generation has the highest average credit score. Scores go down from there. Baby boomers do better than Gen X, Gen Xers beat out millennials, and millennials score higher than Gen Z.
Here’s what the average scores look like for people within each of these age groups:
- Silent generation: Average score of 760, which is classified as being a very good score.
- Baby boomers: Average score of 742, which falls into the very good category.
- Gen X: Average score of 706. This is below the nationwide average but still classified as good.
- Millennials: Average score of 687, which is considered a fair-to-good score.
- Gen Z: Average score of 679, which is also between good and fair.
Of course, these are just averages and your score may be higher or lower than those in your demographic group. Still, on the whole, credit scores get better as you get older.
Why do older generations have better credit?
There are a number of explanations for why credit scores are higher for those at an advanced age and go down as ages decrease.
One of the biggest factors is that older Americans may simply be more financially stable. Some will have been receiving a steady paycheck or Social Security benefits for decades. This can make it easier to pay bills on time, which is a key component in the credit scoring formula. They may also have had time to pay down a lot of their debt.
Credit history also plays a role in your credit score. Older people are more likely to have a long credit history. They may also be more likely to have a mix of different kinds of credit. This includes things like a credit card but also a mortgage or personal loan. Having a good credit mix is another factor in the scoring formula.
The good news is, if you’re young, you have plenty of time to improve your score. Even if you aren’t young, you can still take steps toward increasing your credit. These steps include:
- Paying bills on time.
- Not opening too many cards at once.
- Keeping old cards open, as this contributes to a longer average age of credit.
- Not maxing out your cards. Maxed-out cards can lead to a high credit utilization ratio, which has an important impact on your score.
Hopefully, younger Americans will see their scores improve as they reach more advanced ages. If you take the steps mentioned above, it is all but certain to happen to you. Not only will your score increase, you can also do your part to boost the average score for members of your generation.
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