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Millenials and Gen-Z | Who has the better credit score?

August 3, 2020

A recent study shows that credit scores not only vary between two different income brackets or educational attainment but also from generation to generation. The information gathered from the survey sheds new light on the question of the correlation between age and debt more closely.

 Breaking Down the Numbers

According to the latest data, those born before or shortly after the First World War behaved more responsibly than those born during or after the First World War. Baby boomers (born between 1946 and 1964) rank second in credit scores, but also have the highest average credit rating of any generation in the survey and the lowest average debt. Generation Xers, born between 1965 and 1982, ranks third with an average score of just over 80 percent, slightly above the average of the previous generation.

 Finding the Reasons

The relationship between age and average credit standing is obvious: those born after the turn of the century ended up behaving more responsibly than their predecessors. Millennials are associated with higher utilization rates because of their lower credit rating, but not necessarily because of higher debt levels.

Other Reasons

Although age itself is not the deciding factor in how credit agencies tabulate their ratings, maturity seems to have a significant impact on how financially responsible someone is. The fact that age and financial maturity go hand in hand shows that the millennials have the highest credit rating.

Age alone, however, is not the only reason why credit scores vary between generations. It is important to note that millennials face unique problems that previous generations did not.

As the cost of education has soared over the past twenty years, many students have been burdened with an incredibly high credit even before they earn a degree. Many of these credit problems stem from ever-rising interest rates on credit cards and other forms of debt.

It is also worth remembering that it was not until the late 1960s that credit cards became the American’s common mode of payment. While Generation X and Millennials grew up in a world dominated by credit cards, those earlier generations still remember the times when credit cards are not considered a necessity. By examining how one generation deals with its credit, we can learn lessons from which the next generation can benefit. This could easily contribute to the perception that young people are hastier in handling their credit cards.

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Also See…

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