Though 2020 has been rough on personal finances and the U.S. economy, Americans’ credit scores are soaring.
And that’s particularly true among millennials and the younger adults who are members of Generation Z.
“Against the backdrop of the pandemic, we are seeing promising signs of responsible credit management, including lower credit card balances, decreased utilization rates and fewer missed payments — especially among younger consumers,” says the credit bureau Experian in a new report.
Average credit scores are rising to some of the highest levels on record. But if your score isn’t keeping up, don’t worry — because raising it isn’t that difficult if you know what to do.
Young adults lead a jump in credit scores
The company behind the commonly-used FICO rating says the average U.S. score stands at an all-time-high 711 out of a possible 850, up five points from a year ago.
While early returns show consumers have been more credit-responsible during a chaotic 2020, FICO warns that it often takes time for major economic events to be reflected in credit scores. It might be a few more months before the financial strain shows up in consumers’ credit reports.
Meanwhile, the average VantageScore, the newer of the credit scoring systems, also has shot up this year. According to Experian’s annual consumer credit review, the average score has jumped to 688, a six-point increase from last year.
Experian’s data shows members of Generation Z, the youngest adults, saw the greatest gains as their scores jumped an average 13 points in the past year. Millennials improved their scores by 11 points, on average.
How are young Americans doing it? By practicing responsible credit management, Experian says.