Over the last decade, credit ratings have increased consistently. But one thing that hasn't changed is that elderly Americans continue to have the highest average scores of any demographic group in the United States. The latest recent numbers are available below.
Generational Differences in Credit Scores
Credit scores vary significantly between the millennials and the baby boomers. According to Experian's calculations, the average credit score for an adult member of Generation Z in October 2020 was 674 on the widely used FICO 8 scale.
In contrast, the average score for an adult member of the oldest generation was 758, a difference of roughly 85 points. With an average of 680, millennials are not much outperforming Generation Z.
When determining a person's credit score, age is not used as a consideration. However, older customers have had more time than younger ones to create a good credit history and a history of timely payments.
Methods for Raising One's Credit Rating
Generally speaking, a FICO Score of 711 or more is seen as excellent by financial institutions. You should be able to apply for a wide variety of loans if your credit score is near the average for all borrowers.
However, it would help if you didn't count on getting the most significant interest rate and loan terms a lender offers. Lenders and credit card companies may need a stellar credit score range for specific financing.
If you’re FICO score is below average, you may have problems being approved for these accounts. Those with an ordinary or below credit score might stand to gain from making an effort to raise it.
Perform a Credit Check
A review of your credit reports from Equifax, TransUnion, and Experian should be the first step in any effort to enhance your credit score. Credit scoring algorithms use the information contained in credit reports.
Having inaccurate information on your credit report might harm your score. To get a free credit report every week, visit AnnualCreditReport.com right now. As a precaution against the spread of Covivirus X-19, this benefit will be extended until April 2022.
Fixing Mistakes in Credit Reports
When reviewing your credit reports for accuracy, you have the right to file a dispute with any of the three major credit bureaus. To begin the procedure, you can send a dispute form, phone the relevant credit bureau or file a dispute online.
Once a credit agency gets your dispute, they have 30–45 days to look into it and get back to you with the results. If you need a sample disagreement letter, the FTC and the CFPB have you covered.
Never Pay Late
A whopping 35% of your FICO Score is based on your payment history. Payments are made on time to prevent any possible damage to your credit score. However, paying a credit card bill more than 30 days late might hurt your score.
The adverse effects of a payment delay might be shown for as long as seven years. If you have a history of paying bills late, now is the time to break the behavior. Reducing your spending or reworking your budget may help if you're having trouble making ends meet.
If your late payments are an issue because you tend to forget, automated payments may be something to look into.
Reduce Your Credit Card Debt
Another critical component in determining your credit score is how you use your available credit; regarding your credit score, the lower your utilization rate, and the better. The easiest way to handle credit card debt is to pay off the entire monthly sum, not just the minimum required.
Instead, you should make it a habit to pay off your credit card balance in full every month. If you choose this course, you may save money and even improve your credit score.
The Conclusion
From 2011 through 2020, the average credit score in the United States has either gone up or stayed around the same for nine years. A lot more progress was made by 2020, though, and the average score increased by each generation.
The national average in 2020 jumped eight points, from 703 in 2019 to 711 in 2020; the preceding eight rises in the decade were each for only a couple of points. For instance, both Generation X and millennial averages increased by 12 points.
The COVID-19 pandemic likely contributed to the increase. Credit utilization rates declined because lockdowns and travel restrictions hampered many types of discretionary expenditure. Many customers could make their credit card payments on time because of a combination of federal stimulus money and expenditure cuts, resulting in decreased delinquency rates.
