Debt still drag­ging down mem­bers of Gen­er­a­tion X

Younger, older peo­ple throw­ing off shack­les

The Signal - - USA TODAY - Paul David­son

Gen­er­a­tion X con­tin­ues to strug­gle with debt while Mil­len­ni­als and Baby Boomers make pos­i­tive strides, ac­cord­ing to a new re­port.

Ex­pe­rian’s State of Credit re­port paints a rel­a­tively healthy pic­ture for Amer­i­cans: The av­er­age credit score rose from 673 to 675 over the 12 months end­ing last June, the high­est since 679 in 2007, be­fore the Great Re­ces­sion be­gan. Con­sumer con­fi­dence is up sharply, and the Fed­eral Re­serve said this week that credit card debt hit a record in Novem­ber. That’s a good sign for con­sumer spend­ing but could spell trou­ble down the road if the econ­omy and la­bor mar­ket weaken.

Some age groups han­dle debt and man­age their cred­it­wor­thi­ness bet­ter than oth­ers, ac­cord­ing to the credit re­port­ing agency. Here’s a run­down (Note: the pre­cise range of gen­er­a­tions is of­ten de­bated. This story re­flects how Ex­pe­rian de­fined the ranges for its re­search):

Gen­er­a­tion Z (Ages 18-20) Av­er­age credit score: 634

Mem­bers of this group are just es­tab­lish­ing credit, but they’re off to a good start. They have an av­er­age of 1.44 credit cards per per­son, less than half the U.S. av­er­age, and a typ­i­cal credit card bal­ance of $2,047, less than a third of the national av­er­age. They seem to be tak­ing on more stu­dent loan debt than prior gen­er­a­tions at their age as col­lege tuition costs ratchet higher, said Kel­ley Motely, Ex­pe­rian’s director of an­a­lyt­ics.

Mil­len­ni­als (Ages 21-34) Av­er­age credit score: 638

Many grad­u­ated from col­lege dur­ing or shortly after the Great Re­ces­sion, which ended in 2009. That forced many to take lower-pay­ing jobs, set­ting back their ca­reers. They’re dig­ging out. Their

av­er­age credit score climbed 4 points from 2016 — the most of any gen­er­a­tion — to 638, and they shaved their over­all av­er­age debt by 8% to $222,000. They’ve in­creased their av­er­age mort­gage debt by 6% to $198,303, giv­ing many who put off home pur­chases an op­por­tu­nity to build wealth.

“The econ­omy has im­proved, and they are po­si­tioned to im­prove their fi­nan­cial stand­ing,” said Rod Grif­fin, director of public ed­u­ca­tion for Ex­pe­rian.

Gen­er­a­tion X (Ages 35-49) Av­er­age credit score: 658

They’re sad­dled with the high­est av­er­age mort­gage debt of all the age groups at $231,774. Many prob­a­bly bought homes at the peak of the hous­ing bub­ble, in­clud­ing ex­pen­sive houses in higher-in­come neigh­bor­hoods that boasted good schools for their kids, Grif­fin said. Home val­ues plum­meted dur­ing the hous­ing cri­sis be­fore re­coup­ing much of those losses in re­cent years. This group has a high rate of late debt pay­ments at 0.54% and the most av­er­age non-mort­gage debt at $30,304. Still, they, too, are mak­ing gains. Their av­er­age credit score rose 3 points from the prior year to 658.

Baby Boomers (Ages 50-70) Av­er­age credit score: 703

They have sub­stan­tial mort­gage debt at an av­er­age $188,828, but that’s less than Gen X as many Boomers pay off mort­gages or down­size their homes. They’re in pretty good fi­nan­cial shape, boast­ing a late pay­ments rate of just 0.3%. The group’s av­er­age credit score in­creased to 703 from 700 over the year.

Silent Gen­er­a­tion (Ages 70-plus) Av­er­age credit score: 729

Their av­er­age mort­gage debt is sur­pris­ingly high for their age at $156,705, but other debts are low, as is their late pay­ment fre­quency of 0.12%. Their av­er­age credit score of 729 is the high­est.

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