Debt still dragging down members of Generation X
Younger, older people throwing off shackles
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.