As usual, the mainstream media reporter buries the lead in the body of the story. There is much scorn for the millennial generation by the older generations. Of course millennials will have the lowest credit scores. They have lower paying jobs and less time to build up a credit history. Duh.
The chart below actually shows Generation X to be in the worst shape. Millennials have a debt to income level of 1.5, while Gen X has a debt to income level of 2.5. Even Boomers have a debt to income level of 1.9.
Millennials are burdened with more student loan and auto loan debt than Gen X at similar ages. The eye opener is how few millennials are using credit cards – far less than Gen X at the same age. This fact combined with the fact that millennials have just surpassed the dying off Boomers as the largest generational cohort in the country, explains why retail sales have gone stagnant and credit card debt is billions lower than it was in 2008.
The millennials may have their issues, but not going into credit card debt as the political and financial status quo desires could be a game changer. An ever expanding level of consumer debt is the only thing sustaining this Ponzi Scheme. If the millennials refuse to cooperate, the game is over.
Guest Post by Quentin Fottrell
This generation of Americans has the lowest credit score
Michael D Brown / Shutterstock.com
The largest generation of Americans has the lowest credit scores.
Millennials — those roughly defined as aged between 19 and 34 — have the lowest credit scores of any generation of Americans. They have an average credit score of 625 on an average debt of $52,120. By comparison, Generation X (aged 35 to 49) have a credit score of 650 on average debt of $125,000, while both baby boomers and the Greatest Generation (with a combined age of between 50 and 87) have credit scores of 709 on average debt of $87,438.
“It’s important to keep in mind that credit scores are built on credit experiences,” says Michele Raneri, vice president of analytics and business development at Experian, while talking about millennials. “While this generation has been slower to use credit, they have plenty of opportunities to build a positive credit history.”
The report — released by credit bureau Experian — was based on a statistically relevant sample of anonymous data from Experian’s consumer credit database. The VantageScore 3.0 — which ranges from 300 to 800 — was the credit score used in this study. Anything between 601 and 660 is regarded as fair credit, while poor credit is between 501 and 600 and bad credit is considered anything below 500, according to financial website Credit.com. But different lenders may have different criteria when it comes to lending money, and may approve borrowers with a credit score of below 700. (The U.S. Census Bureau estimates that millennials are projected to hit 75.3 million people this year, surpassing the projected 74.9 million boomers.)
The size of millennials as a group makes them a powerful (and growing) segment of society, Raneri says, but – in some cases, at least – they are taking on more debt than the next oldest cohort did at their age. Auto loans make up 14% of all recently opened accounts for millennials versus 1% for Generation X at the same age in 1998, for example. Similarly, student loans make up 24% of all new accounts for millennials, compared with 20% for their Generation X counterparts at a comparable age. However, fewer millennials in 2015 have a love for plastic, with only 27% of their recently opened accounts being bank cards, the report found, compared with 46% for their Generation X counterparts at the same age.
Some 36% of millennials have never owned a credit card, compared with 13% of Generation X and baby boomers, another recent study by CreditCards.com, a credit card comparison site, found. One possible reason for this is that the 2009 Credit CARD Act, or Credit Cardholders Bill of Rights, placed strict rules on marketing and issuing credit cards to young adults: Americans aged 21 and under must show proof of income to repay card loans or have an adult cosign if they want accounts in their own names. As their earnings improve, experts say more millennials will transition to credit cards for greater rewards and consumer protections. Credit cards also limit liability on stolen funds to $50 while liability is staggered for debit cards.
…..baby boomers and the greatest generation, seems the fucktard forgot there is another generation (silents/artists) sandwiched in between. Just a 21 year slice of Americana is all, no biggie. Fuck accuracy I guess.
Credit scoring — using super-secret formulas that no one outside the credit bureaus has access to — is pretty much a major scam benefiting banks and business. Fuck this dude.
” … may approve borrowers with a credit score of below 700.”. MAY approve? Most banks, not all, love low credit scores cuz they can jack up the interest rates sky high Fuck this dude.
They are using their student loans and parents/grandparents as credit cards.
C’mon.
Let me give you a sample of the millies I deal with in business :
1. Male age 29- College educated, second language, quit good job after one year. Is now working less than 30 hours per week as barista at Starbucks. Lives with parents.
2. Male age 27- College educated, quit good job with major corporation in technology after 2 years, is now putting together bicycles in a bike shop. Lives in small house parents helped to buy.
3. Male age 26- College degree, quit good job overseas after 2 years, is now doing food prep in a restaurant. Lives with parents.
4.Female age 24- College educated, second language, worked in England for a year, now works short hours at Starbucks. Lives with parents.
None have children, only one is married (also lives with parents). None have any intention right now of going back to higher paying jobs.
I don’t think they are concerned about credit ratings.
Not that I care too much, but I get the sense that whatever dipfuck down arrowed me can’t read for shit…..the author forgot an entire generation!
My 30 year old daughter is an Executive Chef for a local corp with 5 high buck restaurants. On the side she bakes fancy wedding & celebration cakes.
She had a very difficult time finding a non-deadbeat male.
I long since stopped giving a shit about my credit score. It’s a carrot and stick for a game I refuse to play. After years of layoffs and chump (temp) jobs I don’t have much by way of assets but I don’t have debt either.
@Tommy
Please define the missing cohort by age range. Thanks.
I have a Gen X dtr (39) with no debt and a high (100k plus) salary and a Milllennial son (34 soon to be 35) with no debt and a high salary. The former is “married” and childless and the latter is married with one kid and another on the way. It appears they got lucky (so did I!), but they’re both worker-bees, so…
The silent generation was born between 1925 and 1942. The youngest of this generation is 73. Since most of them have died, they aren’t really pertinent to the story.
Credit scoring was invented by banks for two reasons: 1) to make underwriting any financial transaction/instrument quicker & easier and 2) as a defense against claims of racial discrimination by ACORN-type organizations & shakedown artists (the Jesse Jacksons). Now the shakedown artists are trying to claim that credit scoring is itself discriminatory, but no one’s buying it. They’re hoisted on their own petard – whatever the fuck a petard is.
Oh they’re relevant – we’re keeping ’em alive longer than ever. As a generation that enjoyed a standard of living better than their parents AND there children – they are the driver or maybe precursor to our exploding health care system. But they’ve got the money, assets, and boat loads of property. They still matter – my point is the author omitted a generation. That was my point, not sure why or how that got taken wrong…..but whatever. Silents’ influence, in my opinion, is waning but still very much there. Where I’m from they are the reason families still gather for family reunions and why in-laws still behave. They all want in on the will and estate.
Bea Lever,
You keep referring to these millennials as quitting “good jobs.” It seems your definition of a good job must be different than theirs.
Personally I am not a big fan of corporate life – in fact, I hate it. I’d rather put bicycles together than deal with the mind-numbing bureaucracy and paper-pushing that I have to deal with, too.
But clearly it was more important to me to get my own place to live. If that means I have to be bored or irritated all day, at least when I go home I can have some peace and quiet. The number one rule of a job for me is that it has to pay the bills. Doing things I enjoy that don’t pay the bills are what I call “hobbies.” If millennials view things differently, I’m not saying they’re wrong, but their priorities sound different than mine.
It would be interesting to know how their parents feel about it. If you were 50 years old and your 25-year-old quit their corporate job to do something easy and fun all day, how would you feel about them moving back in with you?
My parents kicked me out. When I got out of college, I had to put up with my mother screaming at me every day about why couldn’t I just find a job if I had a college degree? Back then, there was no Internet, so finding a job meant going through the want ads in the newspaper and typing cover letters and sending them through the mail, and since we lived way out in the boonies, it also meant driving about 50 miles, if I could get an interview. It took me about three months to find a job, through a temp agency.
Who are these parents who don’t think their kids are failures if they don’t immediately move out, let alone if they move back in later?
Pirate Joe
Maybe I would have rather spent the last 50 years fucking off and doing what I wanted to do instead of being an adult. Yes, I said ADULT. Adults keep a good paying job and pay their own expenses, they marry and have children, they pay their OWN bills. No, it isn’t fun to be an adult and be responsible but life is not about everyday being a funfest.
The parents of the above listed minnies would be much happier if they got the hell out of their house ( I know their parents also). Minnies are a private sector FSA that have no shame about sponging. There are some fine upstanding minnies, I would say 20% of the ones I deal with.
If those were my children, I would burn their bed in the front yard.
@Admin: Shit! I’m a Silent and I’m damn well not dead yet.. I intend to go out screaming and fighting, throwing booze bottles and leaving skid marks behind me.. Not to mention my last wish: One final great, off the wall orgasm!
But this is a world that I don’t fully understand – so I’m a little shy about standing up and being counted because I might be on the wrong side and not know it!.
MA
Bea,
The story about the guy fixing bikes got me to thinking about my own bike mechanic. He had a full-time job as a teacher and fixed bikes on the side. Then he retired from teaching and took shifts as a bus driver while still fixing bikes on the side. Now he just fixes bikes.
I haven’t enjoyed my corporate jobs but used the money I earned to pay off my home. I was 100% debt-free and had a decent stash of “fuck you” money when I was 40. Now I do contract work and get to spend more time on those hobbies I enjoy. It didn’t kill me – it was just something I had to wait a while to attain.
I would love it if every day of life was a funfest! It can’t, unfortunately, but I see it as a worthwhile goal to make it as enjoyable as possible. However, I agree with doing it on my OWN DIME.
There are people from other cultures where it’s normal for several generations to live together. Sounds like hell to me, but I guess it works for some. In those families, the adult children are probably doing their share to contribute to the household, as opposed to “fucking off and doing what they want,” as you put it. Maybe Junior mows the lawn and pays the cable and electric bills or something.
What the Millenias should be doing is having more babies. More babies is the cure fer what ails us as uh country and gawd dammed society.
Dutchman – I understand bb is available. You might mention that to your daughter.
He’d make a terrific son-in-law, hardly ever home, just wire the paycheck like he does for his ex. Hell, LLPOH, you should fix your daughter up, marry them over the internet and have him Xoom the money.
They’re hoisted on their own petard – whatever the fuck a petard is.
It’s called an IED now.