What Generation Has the Lowest Credit Score? And Why? – Credit Fresh


There are generational divides when it comes to many things, including credit scores. Read ahead to learn which generation has the lowest credit score average and how members of that generation can change those results for the better.

Who Has the Lowest Scores?

On average, Generation Z has the lowest credit scores — and Millennials aren’t too far ahead of them. It seems that every generation tends to be better with credit scores the higher up they go. Generation X has a higher average than Millennials. Boomers have a higher average than Generation X. And the Silent Generation sits at the top with the highest average.

Why Is That?

Is it that older generations are naturally better at managing credit? Is Generation Z not as responsible as its predecessors?

No. The reason for this generational pattern with credit scores is that older citizens tend to have more experience with credit than younger ones.

A credit score is measured by certain factors: credit mix, credit utilization, new credit, payment history, and credit history. The credit history, which means the length of time that credits accounts have been open and active, often makes up 15% of the total score. The more credit history that you have, the better your score is likely to be. So, when your experience with credit is brief, the score will inevitably be lower.

The oldest members of Generation Z are in their early twenties. Their experience managing credit is still very new. They may have applied for a credit card for the first time in the past year alone. Members of the Silent and Boomer Generation have decades of experience to help bolster their own scores. Their age provides a clear advantage.

Comparing credit score rankings by generation is like comparing homeownership rates by generation. The youngest citizens are less likely to purchase a house because they are new to the job market and have accrued very little savings in comparison to older citizens who have long careers and significant savings.

How Can They Bring Their Scores Up?

Credit history isn’t the only factor that determines a credit score. If a member of Generation Z is unhappy with the score sitting on their credit report, they can still take steps that could bring them higher up the ranks. These are three simple steps that they could take to achieve this goal:

Strengthening the Credit Mix

What is a credit mix? It’s the variety of credit accounts that a person has, whether that is revolving credit, installment credit, charge cards, or service credit. The more variety that a person has, the stronger their credit mix will be, which bodes well for their credit score. Credit mix often determines 10% of a user’s score. While it’s a small factor of the score’s calculation, it could still make a significant difference.

If someone is worried that they don’t have a strong credit mix, they should make a note of all of the types of accounts that they have and see what could be missing. For instance, it could be useful to add a personal line of credit into their financial portfolio if the only type of revolving credit that they have is a single credit card. A line of credit has several features that could make it beneficial in this scenario:

  • It can improve the user’s credit mix.
  • Unlike an installment loan, the user can have more control over their repayments since it’s a form of revolving credit.
  • It may have a positive effect on the user’s credit history.

Keep in mind that you should only ever submit a request for a line of credit if you need one to help you cover an emergency expense.

Reducing Credit Utilization

Credit utilization is the amount of debt that a user is carrying in comparison to their available credit. For instance, if they have balances that are close to their credit limits on their accounts, they will have a high credit utilization ratio. This can reflect negatively on their credit score because it makes them a riskier borrower. They are more likely to max-out accounts and default on payments than users with lower utilization ratios.

Credit utilization often counts for 30% of a credit score. It’s very important for users to focus on improving this feature.

What can they do to improve their credit score? Financial experts recommend that users strive for a 30% credit utilization ratio or lower for the sake of their credit. Users can achieve this by paying down their debt loads and keeping their balances consistently low. If they have the opportunity to raise their credit limits, they can also do that to offset the ratio.

Improving the Payment History

A user’s payment history is the biggest factor influencing their credit score. It counts for 35% of the calculation. It’s also a category that members of Generation Z can manage, as long as they pay close attention.

A strong payment history requires the user to make consistent payments that are in-full and on-time. Making a habit of missing payment deadlines will eventually hurt their credit score. So, how can someone improve their payment habits?

  • Use online banking to automate payments for recurring bills
  • Use calendar apps to keep track of upcoming deadlines and send reminders
  • Sign up for bill reminders from banks and other creditors
  • Calculate bill payments into the monthly budget

Generation Z doesn’t have lower credit scores because they’re lazy or irresponsible. They have them because they’re new to credit. If members of the generation want to raise their score, they can follow these simple tips to boost it as much as they can.

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