Generation Gap: Heavy Debt Load Impacts Gen Xers’ Credit Scores

/ BY / Credit Score

Pity the poor Gen Xers, born between 1966 and 1982. Often overlooked because of the much larger numbers in the Baby Boomer generation that precedes them and the Gen Y that follows, they are also in the unenviable position of carrying more debt than any other generation.

People age 30 to 46 now owe an average of $111,121, according to the Generational Credit Trends Report study from Experian, one of the major U.S. credit bureaus. That's an average of 42 percent above the U.S. average $78,030. The Boomers, on the other hand, while also above that average, owe only $104,951.

Both Gen Ys-relatively new to the workforce and to credit-and seniors have a below average debt load. For Gen Y, the average is $34,765; the oldest Americans-those 66 and above-are just above that level, at $38,043 average debt.

But Gen Xers don't score the worst in every category. 750 is the average credit score in the U.S., as measured by the VantageScore rating that was used in the study. Gen Y has the lowest average scores: 672, which is 10.5 percent below that national average. Gen X's score is 718 (4.4 percent below average), while both Boomers come in above the average, with 47-65 year olds coming in with an average credit score of 782 (4.13 percent above average); and the seniors with an average score of 829.

An improvement in the economy could benefit the credit ratings of all generations. Experian's recently-released "State of Credit 2012" report showed that there are some hopeful signs. Over the past year, the average number of late payments decreased by 2% and foreclosures decreased by 12.59%. During the same period, the national unemployment rate decreased from 9.2% to 8.2%, and median family income increased from $64,200 to $65,000.

Geography Makes a Difference

Age doesn't seem to be the only predictor of credit scores, however. Where you live also seems to make a difference, according to the Experian study.

Minneapolis, Minnesota residents can lay claim to the highest average VantageScore-787. People who live in Harlington, Texas, on the other hand, have the lowest average score in the country-618.

Wisconsin residents must have good credit habits, since the Experian study places four of the state's cities in the top 10 with the highest average VantageScores:

  1. Minneapolis, Minnesota (787)
  2. Madison, Wisconsin (786)
  3. Wausau, Wisconsin (785)
  4. Sioux Falls, South Dakota (784)
  5. Cedar Rapids, Iowa (783)
  6. San Francisco, California (783)
  7. Green Bay, Wisconsin (781)
  8. La Crosse, Wisconsin (779)
  9. Boston, Massachusetts (778)
  10. Duluth, Minnesota (777)

The cities with the lowest average credit scores include:

  1. Harlington, Texas (688)
  2. Jackson, Mississippi (702)
  3. Corpus Christi, Texas (706)
  4. Shreveport, Louisiana (708)
  5. Monroe, Louisiana (709)
  6. Augusta, Georgia (710)
  7. El Paso, Texas (710)
  8. Myrtle Beach, South Carolina (710)
  9. Memphis, Tennessee (711)
  10. Savannah, Georgia (713)

But there's some good news even for the lowest ranking states. Seven out of the ten actually improved their average scores during the past year.

Residents of Bakersfield, California, and Las Vegas, Nevada, can be particularly proud-their average credit scores are the most improved over the past year. Bakersfield's score went up points, from 709 to 717, while their average debt decreased the most (by 1.24%, according to Experian).

Las Vegas had a whopping 162.54% decrease in the number of foreclosures and a slight decrease in average debt and in the unemployment rate. These factors helped increase the city's average credit score by five points-from 709 to 714.

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