Though the COVID-19 pandemic has created financial hardship across the globe, Americans are doing a good job managing their credit. Experian’s 11th annual State of Credit report showed that Americans are maintaining healthy credit profiles by reducing utilization rates, credit card balances, and late payments.
“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,” said Alex Lintner, group president of Experian Consumer Information Services. “Educating Americans about the factors included in their credit profile and how to manage these responsibly is of critical importance, especially on the road to economic recovery.”
The average credit score in America was 688 – a six-point increase from the same period in 2019, according to Experian. Experian attributed the year-over-year increase in average credit scores to younger consumers.
When compared to 2019, Americans are carrying fewer credit and retail cards and less credit card debt on average. Delinquency rates for 30–59, 60–89 and 90–180 days past due all decreased year-over-year. Gen Z had fewer missed payments than all generations, except the silent generation.
Though retail spending, nonmortgage debt and mortgage debt increased, utilization rates – sometimes referred to as balance-to-limit ratios – decreased by 4% to 26% in 2020. Gen Z borrowers posted the largest reduction at 6%, followed by millennials, or Gen Y, whose use of available credit decreased 5% year-over-year.
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