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Why older Americans tend to have better credit scores

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Hill Street Studios/Getty Images

Hill Street Studios/Getty Images

When searching for a credit score role model, look to your elders.

New data from credit bureau Experian paints a pretty telling picture: Each successive generation has a higher average credit score than the one before it.

Sorry, young millennials.

But age isn’t the determining factor. In fact, your credit score doesn’t take your age into account at all. It’s your credit experience that matters, says Rod Griffin, Experian’s director of public education.

“The older generations tend to use credit less often, carry less debt, have more paid off,” Griffin says.

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Experian’s latest State of Credit report released Wednesday shows the nation’s average VantageScore credit score is now 673, up four points from 2015. VantageScores range from 300 to 850, like the more well-known FICO score. (The average FICO score is 695.)

Low unemployment and a modestly expanding economy has resulted in fewer delinquencies, which has helped push the average credit score higher, the Experian study found.

“When you’re talking about credit scores, improvements tend to be incremental. So when you see a four-point increase over a year, that’s actually pretty good,” Griffin says. “Generally, I think it’s a really positive thing to see. If you look at the economic situation we’re in right now, it correlates quite well.”

Credit scores by age

But while there’s overall improvement, older Americans are the only age group on average that have credit scores worthy of the best loan rates. Here’s a look at the average VantageScore by age:

  • Silent generation (ages 70+): 730 credit score
  • Baby boomers (50-69): 700
  • Generation X (35-49): 655
  • Generation Y (21-34): 634
  • Generation Z: (20 or younger) 631

Experian data shows that older generations make late payments less often and have a lower credit utilization – that’s how much credit you use in comparison to how much has been extended to you. These are key factors in determining your credit score.

The national average utilization rate is 30 percent, according to Experian. GenXers and older millennials use more than half of their available credit, while Americans over the age of 70 use just 16 percent.

The oldest Americans also carry about half as much credit card debt as boomers do. They also own fewer credit cards, and, of course, have longer credit histories, another important factor.

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Scores reflected in life experiences

Unfortunately, telling people to model their financial lives after their elders ignores a big piece of the credit puzzle. Life events can help dictate credit scores, as well, Griffin says.

The youngest adults lack a long credit history, which impacts their credit score. Many of them are using credit for the first time. Older millennials and GenXers are raising families, meaning their spending is necessarily higher than older generations.

Still, looking to older Americans once again reinforces some of the key elements that go into a good credit score: Pay your bills on time and restrict how much credit you use.

“When you’re improving your credit score, you’re increasing your ability to access financial services at a lower cost, and you are not surprised by the kind of answers you don’t want to hear from your lenders,” Griffin says.

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