As you age, your credit score improves. A study of average credit scores across generations showed that every major demographic group has a higher average credit score than the previous generation.
Analysis by credit ratings agency Experian shows a slow but steady upward trend in scores from the youngest Generation Z consumers to Millennials, Generation X and Baby Boomers.
The best of the bunch is the so-called “Silent Generation.” This group includes people 78 and older. They are the only group that scores very highly on the FICO 8 scale.
Key Takeaways
- The average American’s credit score rises slowly but steadily with each generation.
- Age is not a direct factor in calculating credit scores, but the length of time a consumer has maintained a good credit history is a factor in calculating the score.
- Credit scores have improved across all generations over the past decade.
How credit scores break down by generation
The average credit score for all Americans in 2023 is 715, up 1 point from 2022.
Credit scores range widely from Gen Z to the Silent Generation. Based on the commonly used FICO 8 score, credit reporting agency Experian calculated that the average score for Gen Z consumers aged 18 to 26 was 680 in the third quarter of 2023, while the average score for the oldest generation (the Silent Generation), aged 78 and older, was a full 80 points higher at 760. This makes them the only group with an average score in the very good credit score range.
Millennials, ages 27 to 42, didn’t score much higher than Gen Z, with an average score of 690. From there, Gen Xers, ages 43 to 58, scored 19 points higher at an average of 709, and baby boomers, ages 59 to 77, scored even higher at an average of 745.
Age is not an explicit factor in calculating credit scores. However, older consumers have a better chance of building a credit history and establishing a good payment record than younger consumers.
| Average FICO 8 Scores by Generation | ||
|---|---|---|
| generation | 2022 | 2023 |
| Generation Z (18-26 years old) | 679 – Good | 680 – Good |
| Millennials (27-42 years old) | 687 – Good | 690 – Good |
| Generation X (43-58 years old) | 707 – Good | 709 – Good |
| Baby Boomers (59-77 years old) | 743 – Good | 745 – Good |
| Silent Generation (78+) | 760 – Very good | 760 – Very good |
Source: Experian Q3 2023 data
Credit card balances have been increasing across the United States since 2021. As of the end of the fourth quarter of 2023, balances exceeded $1 trillion.
How Credit Scores Are Calculated
The first thing to understand about credit scores is that there are multiple scoring models. However, the most widely used credit score by most lenders is the FICO 8 score, which is tracked by all three credit reporting agencies.
FICO 8 scores range from 300 to 850 and take into account the following five weighted factors:
- Payment history. This is the factor that has the greatest impact on your score, with a weighting of 35%. It measures how often you make payments late or on time.
- Credit utilization. Your credit utilization ratio also counts a lot, making up 30% of your credit score. It refers to how much of your available credit you’re using at a given time. In other words, how much debt do you have relative to your available credit? The lower your utilization ratio, the higher your credit score.
- Length of credit history. This factor is weighted at 15%, which is significantly smaller. But having a credit history that spans decades, rather than just a few years, will improve your credit score. This is one reason why older consumers tend to have higher credit scores.
- New credit inquiries. You’ve applied for new credit more often in the past two years, which may have an impact on your credit score. New credit inquiries account for 10% of your total credit score, but they are far less important than the factors listed above.
- Credit mix. Likewise, showing that you can manage a mix of different credit types (such as credit cards and installment loans like mortgages or car loans) accounts for 10% of your score.
How is my credit rating determined?
The three major credit rating agencies maintain and update credit scores for U.S. consumers.
All three agencies give you a three-digit score that indicates how much credit you have and how well you repay your loans on time. Every time you apply for a loan or credit card, the company you apply to uses one of the agencies to find out your current score. Whether you get a loan and what interest rate you’ll be charged depends on that score.
What is a “good” credit rating?
A credit score of 670 or higher is generally considered good. Scores range from 300 to 800. Any score below 670 is poor or fair. Scores of 670 or higher are good, very good, or excellent.
How can I know my credit score?
You can monitor your credit score online at any time. Credit scores are available for free from sites like Credit Karma and are also available in many online payment apps, including those from credit card issuers like American Express and Citibank.
You are also legally entitled to a free copy of your credit report from each of the three major credit reporting agencies. You can view this report at AnnualCreditReport.com. This document is more detailed and shows your recent history of credit transactions and is the basis for your credit rating.
Which states have the highest and lowest credit scores?
In 2023, Minnesota had the highest average credit score at 742. It was followed by Vermont (737) and Wisconsin (737). The state with the lowest average credit score in 2023 was Mississippi (680).
Bottom Line
Experian sees mixed news in its latest report. The average score for 2023 is slightly higher than that for 2022. However, the agency also expressed concern that consumers have largely spent the savings accumulated during the COVID-19 pandemic, while the increasing monthly payments on credit cards and various loans may eat up a larger portion of monthly income.
Future economic forecasts are likely to improve, especially in terms of credit scores, but may also include financial headwinds.
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