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How Does Your Credit Score Compare with an Average American Consumer?April 24, 2019
Many credit card holders are curious to know how their credit scores, or credit card debt, stack up against that of their family, friends or even neighbors. But have you ever wondered how well you measure up against a typical American consumer?
Every year, Experian releases a State of Credit survey that can answer quite a few of the questions that you may have. In its annual report, the credit institution outlines the credit profile of an average American consumer. It also has interesting facts, such as states where consumers have the highest and lowest credit scores, as well as a generation-based credit snapshot.
Interestingly, the credit score of an average consumer is 675, which falls into the good range of scores from 670 – 739. Such a consumer holds 3.1 credit cards with an average balance of $6,354, and 2.5 retail credit cards with an additional $1,841 in balances. Average mortgage debt and average non-mortgage debt (primarily consisting of car loans) stand at $201,811 and $24,706 respectively.
As far as state-wide credit profiles are concerned, Minnesota residents can boast of the highest average credit score (709), with the next four places occupied by Vermont (702), New Hampshire (701), South Dakota (700), and Massachusetts (699). On the other hand, the five states with the lowest scores are Nevada (655), Louisiana (650), Georgia (654), Alabama (654), and Mississippi (647).
According to credit expert John Ulzheimer, this pattern with states in the upper Midwest performing better than the states in the south has been fairly consistent over the last two decades. The main reasons behind Mississippi holding the last place include a higher delinquency rate and a higher average credit card utilization ratio.
This is not surprising. It’s a known fact that consumers with good credit scores tend to receive cards with higher initial limits and larger limit increases, which in turn allows them to have higher balances while also having higher scores. Meanwhile, consumers with poor credit scores usually have lower limits, so even modest balances can cause a higher utilization ratio and, thus, lower scores.
As far as generation-wise differences are concerned, Generation Z (born after 1996) have the lowest average score (634), mostly due to the fact that they have few credit accounts and consequently, thin credit files. Generation Y, also known as Millennials, (born 1982-1995) have slightly better scores at 638, and for Generation X (1967-1981), average score stands at 658. Only when the age scale reaches Boomers (1947-1966) does the average exceed 700 (703), with the Silents (born before 1946) boasting the highest average score of 729.
Nationwide, 22.3 percent of Americans have a credit score at or above a "very good" 781.
If you are trying to improve your credit score, the first thing that you need to concentrate on is making timely payments. Try and make sure that your credit utilization ratio does not exceed 30%. If you carry high balances on your card month after month, pay down your debt and you should see your credit score rise quickly.
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