‘State of Credit’ Report Indicates American’s Credit Scores Better in Recent Years

Getting a credit card can be daunting, but in today’s economy, a person needs credit to make big purchases such as a house, car or loans to start a business. 

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The recently released annual “State of Credit” report by Experian shows that the U.S. may be headed into the worst recession in 80 years. The report suggested that while American’s credit scores are lower than they were at the start of the economic downturn, 2018 marks the largest year-over-year increase since 2008.

“We’re continuing to see the positive effects of economic recovery, through improved credit scores and lower delinquency rates,” said Michele Raneri, vice president of analytics and business development at Experian. “Since the recession, responsible credit card behaviors and lower debt among younger consumers are driving an upward trend in average credit scores across the nation. Over the past 10 years, those 18 to 21 increased their credit scores by 23 points on average compared with those 18 to 21, ten years ago.”

According to the report, the average number of credit cards a person had in 2018 averaged 3.04, compared to 3.40 a decade ago. Credit card balances have also declined from 2008 with most having about $500 fewer in credit card debt in 2018; The average amount of credit card debt in 2018 was $6,508. However, it’s an increase of about $200 from 2017.

The report also indicated that credit scores are slowly starting to rise, jumping five points from 2017 to 2018. The average VantageScore for Americans in 2018 was 680.
The report also found interesting information regarding different age group’s credit card debt and utilization. The oldest group, those aged 72 and older experienced some significant changes, the report suggests.

“While this group continues to have higher credit scores than any other, they saw the most significant drop in average credit scores, with a decrease of 40 points (772 in 2008 compared with 732 in 2018),” the report suggests. “This group also had the most significant increase in credit card balances, up $767 in 2018 to $4,703 (compared with $3,936 in 2008). They also experienced the largest increase in mortgage debt, up $29,602 for a total of $160,735 in 2018 (compared with $131,133 in 2008).”

Highlight of Experian's State of Credit Report
Credit: Experian.com

For those ages 51-71, this age group tends to have more credit cards, an average of 4.02 in 2008 and 3.48 in 2018 than any other age group.

“They have an average credit card balance of $7,637, compared with $8,127 in 2008. In addition, this group has the second-highest amount of nonmortgage debt of all groups (behind those aged 36 to 50) at $27,438, compared with $27,028 in 2008,” the report suggests.

However, the report also noted that while this age group has more credit cards, those ages 36-50 have higher credit card balances, averaging at $7,637.
According to the report, those ages 22-35 saw the second-largest jump in average credit scores since 2008, increasing 15 points to 644 from 629.

“This group has lowered their credit card balances ($5,583 in 2008 to $4,593 in 2018) while increasing their average mortgage debt ($192,554 in 2008 compared with $209,713 in 2018),” the reported noted. “Since 2008, those aged 18 to 21 increased their average balance on credit cards ($2,056 in 2008 compared with $2,259 in 2018) and saw a 23-point increase in credit scores — the largest of any other age group (616 in 2008 compared with 639 in 2018). This is considered a near-prime score, approaching the typical prime lending criteria of 661.”