Latest State of Credit report highlights less credit card debt, lower utilization rates and fewer missed payments year-over-year
In a continued effort to educate consumers about factors influencing their financial health, Experian released key findings from its 11th annual State of Credit report, which examined how consumers are managing their credit histories against the backdrop of the COVID-19 pandemic. This year’s report provided an extended view into how consumers are managing and repaying their debts, showing most Americans are practicing responsible credit management by reducing utilization rates, credit card balances and late payments.
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Findings from Experian’s 11th annual State of Credit report show Americans are maintaining healthy credit profiles.
Results from this year’s report were released following the announcement of Experian collaboration with Operation HOPE, which aims to empower vulnerable consumers to improve their financial health through education and action.
“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 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.”
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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. While retail spending, nonmortgage debt and mortgage debt increased, utilization rates — sometimes referred to as balance-to-limit ratios — decreased by four percent to 26 percent in 2020. These factors attributed to an average credit score of 688 — a six-point increase from the same period in 2019.
Highlights of Experian’s State of Credit report:
|
2020 State of Credit Report |
2019 |
|
|
2020 |
||
|
Average VantageScore®[1, 2] |
682 |
|
|
688 |
||
|
Average number of credit cards |
3.07 |
|
|
3.0 |
||
|
Average credit card balance |
$6,629 |
|
|
$5,897 |
||
|
Average revolving utilization rate |
30% |
|
|
26% |
||
|
Average number of retail credit cards |
2.51 |
|
|
2.42 |
||
|
Average retail credit card balance |
$1,942 |
|
|
$2,044 |
||
|
Average nonmortgage debt |
$25,386 |
|
|
$25,483 |
||
|
Average mortgage debt |
$213,599 |
|
|
$215,655 |
||
|
Average 30–59 days past due delinquency rates |
3.9% |
|
|
2.4% |
||
|
Average 60–89 days past due delinquency rates |
1.9% |
|
|
1.3% |
||
|
Average 90–180 days past due delinquency rates |
6.8% |
|
|
3.8% |
1 VantageScore is a registered trademark of VantageScore Solutions, LLC.
2 VantageScore range is 300 to 850.
Positive results driven by younger borrowers
The year-over-year increase in average credit scores can be attributed to younger consumers practicing responsible credit management. While average utilization rates dropped for every generation, the most significant decreases were seen in Gen Z borrowers who saw a 6 percent reduction in their use of available credit, followed by millennials, or Gen Y, who saw a 5 percent decrease year-over-year.
While Gen Z and Gen Y are carrying more credit cards than they were in 2020, their credit card balances decreased year-over-year. Looking at 30–59, 60–89 and 90–180 days past due delinquency rates showed Gen Z had fewer missed payments than all generations, except the silent generation. Lower utilization rates, less credit card debt and fewer missed payments fueled a 13-point increase in average credit scores for Gen Z and an 11-point increase for millennials.
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