A new study of Experian® shows that only 39 percent of millennials without a mortgage have a prime or better score and the majority are facing higher delinquency rates.
“This data presents good news for younger millennials interested in buying a home. We’re seeing that small changes in financial behaviors such as building a history of on time payments and improved credit practices can help lenders shift from viewing millennials as high-risk to low-risk relatively quickly,” said Michele Raneri vice president analytics and business development at Experian. “Knowing where you stand from a credit perspective is critical to improving or maintaining your financial well-being.”
Experian looked at personal loan trends, credit scores, bankcard behaviors and mortgage trends of 60 million millennial consumers to understand the borrowing behaviors of the millennials. With this study, Experian revealed their findings:
- The average consumer VantageScore® in the US is 677 and credit scores generally become more prime (661-780) as people age. Younger millennials (age 22-28) have an average near prime score of 652 with older millennials (age 29-35) at the prime score of 665.
- Millennials without a mortgage have an average age of 28, income of $33,000, 623 VantageScore and eight trades on file. Of them, 39 percent are viewed as prime or better (661 or higher).
- Personal loan originations are dominated by older generations. Over the last four years, millennials account for 21 percent of all new personal loan dollars with a 40 percent increase in balances since 2011.
- Younger millennials have an average per loan balance of approximately $7,300 while older millennials have an average balance of approximately $11,700.
- Nationally, delinquency rates on personal loans are on the decline at 1.32 percent. Millennial delinquency rates as of 4Q17 stand at 2.08 percent for younger millennials and 1.51 percent for older millennials.
- As of the fourth quarter in 2017, millennials account for 20 percent of new bankcard dollars. On average, younger millennials carry a balance of just under $3,000 with older millennials carrying approximately $7,500. Millennial bankcard delinquency rates are higher than the U.S. average of 1.54 percent at 2.33 percent for younger millennials and 2.18 percent for older millennials.