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Credit Score Shape-Up Plans for Every Generation

Aug. 17, 2015
Credit Cards, Credit Score
Credit Score Shape-Up Plans for Every Generation
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On average, millennials and Generation Xers have credit scores below the national average, according to a study from the Experian credit bureau. And while baby boomers and the Greatest Generation have above-average scores, their credit is still at risk in retirement.

Having a low credit score can make it hard to borrow affordably, with higher interest rates potentially costing you hundreds or thousands of dollars more over the life of a loan. Each generation has its credit score challenges — and ways to overcome them.


On the surface, it may seem that millennials’ average VantageScore of 625 out of 850 is a sign that the youngest generation of consumers is in for tough financial times. Don’t fret, though. “Depth of credit,” which includes the length of credit history, makes up 21% of the VantageScore. That means younger consumers are likely to see their credit scores rise as they establish a credit history and practice good credit habits.

What you can do:

  • Pay on time, every time: About one-quarter of Americans struggle to pay all their bills on time, according to a 2015 survey sponsored by NerdWallet. Under both the VantageScore and FICO scoring models, payment history carries more weight than any other factor. Making on-time payments a priority when you’re young will help you quickly establish a good credit history and set you up for long-term credit success.
  • Apply for a credit card: According to the Experian study, only 27% of new credit accounts for millennials — those ages 19 to 34 — are credit cards, compared with 46% for Generation X at the same age in 1998. One of the best ways to establish credit without going into debt is to apply for a credit card. It’s important, however, to maintain a budget, avoid spending more than you can afford and pay off your balance in full every month.
  • Keep your credit utilization low: One thing for millennials to note from the Experian data is the generation’s average 43% credit utilization ratio. The credit utilization ratio is the percentage of your available credit that you’re using. The general recommendation is to keep this ratio under 30% — the lower, the better — on each card and on all your cards taken together.

Generation X

With an average VantageScore of 650, Generation X is on the right path but could use a boost. While Generation Xers, those ages 35 to 49, earn on average almost 1½ times as much as millennials, their average credit card balances are double those of their younger counterparts. This suggests that lifestyle inflation for Generation Xers may be outpacing their income. Credit card utilization for Generation X is also relatively high at 41%.

What you can do:

  • Interact with credit, but carefully: As your income grows, it may be tempting to spend a little more lavishly, get a new car or buy a bigger house. Before borrowing money, consider how the loan fits into your short-, medium- and long-term financial goals. The more loan payments you have, the less flexible you’ll be when it comes to your priorities.
  • Pay off your credit card debt: Of all the generations listed in Experian’s study, Generation X carries the most credit card debt ($6,752 on average). Create a plan to tackle your debt load. You may even want to consider a balance transfer credit card with a 0% introductory APR period as part of your debt payoff plan to help you save on interest. Paying off your balances will also help keep your credit utilization ratio down.

Baby Boomers and Greatest Generation

Folks ages 50 and older have an average score of 709, which VantageScore classifies as prime credit. Despite having a lower average income than Generation X, their higher scores and lower overall debt show that time has been on their side. But while these seasoned generations appear to be in the best credit shape overall, there’s still room for improvement.

What you can do:

  • Pay off non-mortgage debt ASAP: Unexpected unemployment or medical problems can derail your finances, especially when you are older and have less time to recover. Having high-interest debt on top of that can ruin your credit if you end up defaulting. Plan to pay off your credit card and other non-mortgage debt as quickly as possible to protect yourself.
  • Pay off mortgage debt before retirement: With retirement on the horizon, now is the time to prepare yourself for the changes that will occur. For example, you may have less income in your non-working years to pay off your debts. With other financial risks, including high health care and potential long-term care costs looming, being completely debt-free can give you peace of mind.

How to find your credit score

You can access your credit score in several ways. and offer access for a one-time or ongoing fee, depending on how long you want access. You can also obtain a proprietary credit score from each of the three national credit bureaus.

Some credit card issuers provide cardholders free access to their FICO scores. They include:

  • Bank of America (sometime in 2015)
  • Barclaycard US
  • Chase (This card only)
  • Citibank
  • Discover
  • First National
  • PenFed

In addition to obtaining your credit score, the Nerds recommend requesting a free copy of your credit report from You can receive one free copy from each of the three credit bureaus every year.

Nerd note: Most credit-scoring models are similar, but keep in mind that the majority of lenders use FICO scores in making credit decisions. So while the VantageScore and other scoring models may give you a ballpark idea, the FICO score will give you a more accurate view of what lenders see.

The bottom line

The first key to having excellent credit is knowing where you stand. Once you know your credit score and have a copy of your credit report, you can focus on pinpointing where you can improve.

Ben Luthi is a staff writer at NerdWallet, a personal finance website. Twitter: @benluthi.

Image via iStock.