An excellent credit score is highly likely to correlate with your age according to new data released by the Minneapolis Fed.
The new data shows that only 2% of Americans 30 years old or younger have credit that would be termed “excellent”, generally defined as a score of 780 or more. On the other end of the spectrum, more than 55% of people 70 or older have excellent credit scores.
Most likely, this is a case of the average age of accounts and length of time the oldest account has been open being far longer than someone in their mid-20s can hope to have. Those with a little more life experience also tend to have a wider variety of credit lines and little debt to their name.
What may even be more disturbing is that only about 15% of millennials have credit that would even be considered “good” by most lenders. The lenders who would extend lines of credit or loans to this group may not even get the best interest rates.
If you’ve ever wondered why so many financial services tend to target their advertising towards the older population, their high creditworthiness, along with lack of debt and retirement funds/incomes, make them look good to lenders. These individuals usually have fewer negative accounts on their credit reports as well.
Elsewhere in the data, Minnesota takes top honors for having the highest average credit score in the country at 707 while Mississippi sits at the lowest with a 642 average. In fact, only Minnesota and North Dakota (700) have average scores at or above 700, which is usually the level where you start to see the best interest rates for loans and credit cards.
On the whole, it does look like America’s collective credit is getting better and it’s likely that there will be more states with an average above 700 once 2016 data gets released.
Credit Sesame gives a good estimate of your credit score if you are interested in seeing how you stack among others in your state. It also helps to keep an eye on your credit to see what direction you’re heading and to prevent yourself from falling victim to identity theft.