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Americans’ credit scores are up, Experian’s latest study shows

Consumers are managing their debt responsibly, even during the pandemic


Despite a downturn in the economy due to COVID-19, consumers are keeping their credit balances low and are making regular payments to drive delinquencies down.

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U.S. consumers’ credit scores are up and their card balances and delinquencies are down, according to a new report from Experian.

The credit bureau on Oct. 20 released key findings from its annual State of Credit report, which showed U.S. consumers have less debt on average and are carrying fewer credit and retail cards.

Consumers have also made a six-point jump in their average credit scores from 2019, making the new average VantageScore 688.

Add that news to FICO’s recent finding that the average FICO score is up to 711 and it paints a picture of Americans managing their debt responsibly, even during the COVID-19 pandemic.

Additionally, the average number of cards consumers carry slightly decreased from to 3.07 in 2019 to 3.0 in 2020 and average credit card balances went down from $6,629 in 2019 to $5,897 in 2020.

“Against the backdrop of the pandemic, we are seeing promising signs of responsible credit management, including lower credit card balances, decreased utilization rates and fewer missed payments – especially among younger consumers,” said Alex Lintner, group president of Experian Consumer Information Services, in a press release.

“Educating Americans about the factors included in their credit profile and how to manage these responsibly is of critical importance, especially on the road to economic recovery,” he added.

See related: 10 tips to improve your credit score

Younger borrowers drove a lot of the results

The Experian study showed that younger borrowers – Gen Zers and millennials – significantly contributed to the results through their responsible credit behavior.

In fact, Gen Zers reduced their use of available credit by 6% and millennials by 5%. Here are some other ways younger generations have managed their credit:

  • GenZers and millennials have more credit cards. While these two groups carry more cards than last year, their credit card balances decreased year-over-year.
  • Gen Zers pay on time. Regarding delinquency rates, Gen Z missed fewer payments than other generations except the Silent Generation (those born from 1928 to 1945).
  • Gen Z and millennial scores went up. Thanks to these two generations missing fewer payments and maintaining lower utilization rates and low credit card debt, their scores went up by 13 and 11 points, respectively.
  • Silent Generation still scores the highest. The Experian study showed that the average VantageScore for Gen Z was 654, millennials 658, Gen X 676, boomers 716 and Silent Generation 729.

See related: Poll – 23% of consumers added to their card debt during the pandemic

Experian’s report revealed Gen Xers tend to carry higher credit card debt than Gen Zers, millennials, boomers and the Silent Generation. Here’s how the generations rank in terms of average credit card balance, from highest to lowest:

  1. Gen Xers: $7,718
  2. Baby boomers: $6,747
  3. Millennials: $4,651
  4. Silent Generation: $3,988
  5. Gen Zers: $2,197

Many consumers are still struggling

“There’s a lot of positive news in here, although I think it’s important to note that many households are still struggling, unfortunately,” Ted Rossman, industry analyst at CreditCards.com, said of Experian’s findings.

Rossman noted he is watching federal stimulus negotiations closely because many Americans still need help.

The lower delinquency rates, in particular, feel artificial in the context of the stimulus programs that have already been enacted and the hardship programs that lenders have rolled out, he explained.

Rossman also noted that many financial institutions believe delinquencies will rise in the coming months.

Whether or not you’re faltering financially, you should closely monitor your debt level and set aside some emergency cash.

“It’s still important to boost savings and pay down debt when possible, and if you’re on the verge of falling behind, ask your lenders for breaks and consider nonprofit credit counseling,” Rossman added.

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