Did you know that the average credit score for Millennials is significantly lower than the “Silent Generation” – those born from 1925 to 1945? The typical Millennial has a fair credit score of just 634, according to a recent study from LendingTree, which examined 9 million Americans.
What’s the Reason for Lower Credit Scores Among Millennials ?
So what does age have to do with credit scores?
First let’s take a look at the average credit scores for different generations.
- Silent Generation: 734 (Very Good)
- Baby Boomers: 696 (Good)
- Gen X: 653 (Fair)
- Millennials: – 634 (Fair)
Credit History
What we can gather from this data is that credit scores increase within each age group. One reason for this is the amount of time you’ve had credit. The more times you’ve proven that you can repay a loan, the better the chance you will make your payments in the future.
Increased Student Loans and Other Non Mortgage Debts
According to the Federal Reserve, outstanding student loan debt was at $1.6 trillion as of Nov. 7, 2018 .This is significantly higher than the total credit card debt, which was recorded as 14.4 billion in August of 2018.
What’s worse, a study at the George Washington University School of Business indicated that two in five student loan borrowers have been late on at least one student loan payment over the course of a year.
Credit utilization and making payments on time will have a huge impact on your credit score which is why these debts may be causing millennials credit scores to suffer.
So What Can Millennials do to Increase their Credit Score?
If credit seems to get better with age, do Gen Xers, Millennials and Gen Zers simply have to wait things out? Absolutely not. There are several other factors besides credit history that influence your score. Credit history actually only accounts for about 15% of your score while payment history accounts for 35%. So be mindful of the impact that paying your bills on time will have on your score.
The most important thing is to be educated on what factors increase or decrease your score and learn how to use credit responsibly.
Read: Improving and Maintaining Your Credit Score for a Michigan Home Loan
Read: 4 Credit Mistakes Michigan Homebuyers Make
If you are considering buying a home, but are worried that you don’t have enough credit, consult with an Oakland County mortgage lender about specific things you can do to increase your score as quickly as possible. They have the ability to analyze your report and help you navigate through the process. For example, which debts to pay down first, etc.
There are also several loan programs that can help borrowers with lower credit and even down payment assistance.
Read: Michigan FHA Loans Can Help Homebuyers with Less Than Perfect Credit
Contact Oakland County Mortgage Lender, Julie Krumholz
Julie is a Metro Detroit mortgage lender servicing Oakland County with over 30 years of experience. Julie specializes in FHA loans which can help those with lower credit scores. She also has a wealth of experience with down payment assistance loans such as RD loans, MSHDA loans and more.
If you are looking for an Oakland County lender to help you increase your credit score or navigate through the home buying process, contact Julie today by calling: 586-382-5482.
