Written by: Ashley Perlmutter
Millennials have been receiving some hot press recently. Let’s take a look and see what they’re up to. In a recent blog we discussed how despite the pandemic, millennials have doubled their assets over the past four years, topping $10 trillion in assets. As we continued to monitor how America’s young adults are setting themselves up for financial success, we found that millennials boosted their credit score more than any generation in 2020. However, we have also seen how individuals are struggling financially despite a high credit score.
The average FICO Score for U.S. consumers hit a record 710 last year, and millennials led the pack with an 11-point increase, according to Experian’s 2020 Consumer Credit Review.
Overall, all generations boosted their credit scores by one to 11 points from 2019 to 2020. These increases are a result of consumers paying their bills on-time and cutting back on spending amid an unpredictable economy. While millennials and Gen X saw double digit increases in credit scores (11 and 10 points, respectively), the silent generation continued to have the highest average credit score at 758.
The silent generation even outpaced the average credit score for the general population (710), which doesn’t come as a surprise since older generations typically have higher credit scores. This can be attributed to having more time to build good and excellent credit. We have also found that during the coronavirus pandemic, individuals have been using federal relief measures, including stimulus checks and a pause in loan repayments to boost their credit score, even though they may be struggling financially.
No matter your age or situation, it’s always important to know your credit score matters. And remember, it’s never too early to start building credit. Consider some of these tips if you are beginning to build your credit: make payments on time, pay in full, and consider utilizing a credit score tracker to ensure nothing falls through the cracks, like an old Verizon bill from college. Tiny unpaid bills such as those can have a lasting effect on your credit score, so make sure you stay on top of your finances and bills.
It’s also important to note low interest rates and how you can use them to leverage your situation. With a high credit score, you can take advantage of historically low interest rates on all loans, including car, home, and student loans. By putting to use some of the tips listed above, you will have a much easier time with lenders when it comes time to take out a loan.