After the recession period, one study by Experian revealed that baby boomers mostly depend on credit, and millennials have more opportunity for improvement regarding proper money management. Experian's Fourth Annual State of Credit study has checked several credit scores and various credit cards. The study also shows how much money is being spent on those cards.
Here are some important statistics on U.S credit:
- Average credit card debt in the U.S = $27,887
- Average number of bank cards = 2.19
- Average balance on those bank cards = $4,501
- Average revolving utilization ratio = 30%
- Average good score (according to Experian, Equifax, and TransUnion is from 300 to 850) = 681
The four age groups are divided into categories. They are:
1. The Greatest Generation (ages 66 and older)
2. Baby Boomers (ages 47 to 65)
3. Generation X (ages 30 to 46)
4. Millennials (ages 19 to 29).
How different age groups manage their debts?
Greatest Generation - This group has the highest average score of 735, lowest average debt of $23,245 (approx), and the lowest revolving utilization ratio of 16%.
Baby Boomers - The highest average balance on credit cards for this group is $5,347. This group is managing its credit very well with the highest average credit cards - 2.66, an average score of 700 and an average utilization ratio of 30%.
Generation X - The middle-aged group has an average debt of $30,039, which is 7.7% higher than national average debt. This group has the tendency to use its credit cards heavily. It has an average utilization ratio of 37%. But on the other hand, its average score is 653, which is quite lower than the national average.
Millennials - The youngest of all, this group has the lowest average score of 628 and is listed for the highest utilization ratio of 37%. But simultaneously, Millennials have an average debt of - $23,332 and average balance on credit cards is $2,682, which are both below the national average.
Tips for your credit Improvement
There is space for improvement in every group's credit management. The younger people have better scope than other groups. So, whatever group you belong to, you can improve your credit as soon as possible by doing the following steps:
- Get your annual credit report and check for any mistakes or omissions. Look for derogatory information and take needed steps to resolve the problem.
- Always pay off bills timely.
- Up-to-date all the late or over-limit accounts as quickly as possible.
- Open a credit card account, use it wisely and pay off the balance. You’ll start generating good credit score this way.
- Don't close old credit card accounts, if needed go for the new ones. Maintain credit accounts with a long history.
- Have a mix of credit such as a car loan and a couple of credit cards.
- Keep your credit balances low, preferably below 25% than the limits.
- Don't open a lot of new lines of credit at once.
You may want to use different plans and strategies to reduce your debts and build good credit. Whether you are a millennial or an aged person, establishing a positive credit report may be possible for you if you use the best strategy and live within your means.