Americans’ Credit Scores Improve as They Age

The silent generation has the best credit, while millennials need to improve.

  • Millennials have the lowest average credit score of any age group (634) while members of the silent generation have the highest (734).
  • Homebuyers with fair credit scores will pay nearly $30,000 more over the life of a mortgage than those with very good ratings.
  • Older Americans have better credit scores in part because of lower child-care costs and student debt, and many may not have such expenses at all.

Back in 2018, an Experian study found that 61 percent of millennials lack a prime homebuying credit score, and now another report highlights how less-than-stellar credit ratings may be hindering more members of that generation from purchasing real estate.

In an analysis of its user data, LendingTree found that the older a person is, the better their credit rating tends to be. Millennials have the lowest average credit score of all generations at 634, rated as fair. Though Gen Xers fare better, with average credit scores of 653, they too fall into the fair bucket.

With scores that average 696, baby boomers are categorized as having good credit. Members of the silent generation — defined as those born between 1928 and 1945 — boast credit scores of 734, making them the only group of Americans who can claim a very good rating.

How to increase your credit score

Our previous research estimated that raising a credit score from “fair” (580-669) to “very good” (740-799) saves $45,283 on a common array of debts. Even though millennials and Gen Xers have shorter credit histories than the older generations, they can improve their credit scores.

Pay off balances on time.

The No. 1 rule in improving your credit is making on-time payments because payment history is the largest component (35%) of your score. If you are concerned that you may miss payments, set up payment reminders or autopay to pay your monthly bills.

Use as little of your available credit as possible.

The amount of debt you owe makes up 30% of your score, and a major component of that is something called your credit utilization ratio. That’s the percentage you use of your available revolving credit. Using a high percentage of your available credit could indicate that you are overextended and may be more likely to miss payments. A good utilization ratio is generally considered at or below 30%, but the lower you keep your credit utilization rate, the better it is for your credit score.

Don’t close old credit cards.

Lenders generally view someone with a longer credit history as a lower lending risk. But it’s a factor over which you have little control — you cannot travel back with a time machine to apply for accounts. One thing you can do, though, is not close your old credit cards, even if you don’t use them. Credit scoring models consider the age of your oldest and newest accounts, as well the average age of all your accounts. Closing your old credit cards will likely lower your average account age. If anything, you can charge one small item to your accounts each month and set the bill to be paid in full via autopay.

Have a mix of credit accounts.

The type of credit accounts you use makes up 10% of your FICO score. The more diverse your credit mix, the higher your score is likely to be. Besides credit cards, many consumers have mortgages, car loans and other installment loans. But if you have a fairly healthy score and don’t need these other loans, it’s not necessary to apply for them just for the sake of having a stellar credit score. After all, the impact of credit mix is relatively modest.

Avoid opening new accounts frequently.

While it’s important to have a number of accounts, it’s not wise to apply for a bunch of new credit cards in a relatively brief period. Lenders may see a spate of new accounts as a risk factor, and the new accounts will also reduce the average history of your credit accounts.

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