How Credit Scores for Mortgage Borrowers Differ

Quick Answer

Consumers with a mortgage generally have better credit scores than those without. But generational differences suggest that differences are less stark among the youngest and oldest generations.

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Historically, about two-thirds of U.S. homes are owner-occupied. As of mid-2022, about 52 million homeowners have a first mortgage on a home, according to Experian data. And while it's generally understood that homeowners are more likely to have higher incomes, skew older and have greater living space than renters, none of these account for how mortgage borrowers compare to those who either rent or own their residence outright.

Mortgage Borrowers Have Higher Credit Scores

First, let's examine the credit scores of newer homeowners. The median FICO® Score among mortgage borrowers was 766 in 2020, according to the most recent Home Mortgage Disclosure Act (HMDA) data available. Median scores based on borrower income or neighborhood income do not drift significantly from the overall median. A FICO® Score greater than 700 is a hallmark of the vast majority of successful mortgage applications, regardless of age or location.

Median FICO® Scores for Conventional Mortgages, 2020
By Income
Low or Moderate 763
Middle 766
High 771
By Neighborhood Income
Low or Moderate 754
Middle 761
High 773
Overall 766

Source: HMDA 2020; conventional mortgages only

As for the 52 million consumers currently managing a mortgage, they have similarly impressive credit scores, according to Experian data. Mortgage borrowers currently sport an average FICO® Score of 757, versus an average of 688 for those without a mortgage.

Average FICO® Score of Mortgage Borrowers, 2015-2022

Score Gap Is Largest Among Middle Generations

As one might expect, average FICO® Scores are higher for homeowners than for those who don't have a monthly mortgage payment. What's more noteworthy, however, is the average score spread between mortgage and non-mortgage consumers across the generations.

Average FICO® Scores of Those With a Mortgage and Without
No Mortgage Mortgage Difference
Generation Z
677 715 +39 points
661 741 +80 points
Generation X
658 749 +91 points
Baby Boomers
704 769 +64 points
Silent Generation
752 771 +20 points

Source: Experian; data as of the second quarter (Q2) of 2022

In other words, homeowners in the youngest and oldest generations have more similar average credit scores compared with their peers who don't have a mortgage. The divide is greater among millennials, Gen Xers and baby boomers. These middle generations have a greater percentage of mortgage payers than either Generation Z (who most likely haven't yet considered buying a home) or the silent generation, who are more likely to have paid off their mortgage.

Homeownership Rate by Age
Age Homeownership Rate
Under 25 14.3%
25-29 30.8%
30-34 46.5%
35-44 58.6%
45-54 67.5%
55-64 73.9%
65-74 78.9%
75+ 76.6%

Source: American Housing Survey, 2019

Housing Inventory Still Plays a Primary Role, Despite Credit Scores

Recent HMDA data confirms a trend of a mortgage market composed of consumers with a solid credit history, as reflected by median and average scores well above both the overall population as well as consumers who don't have a mortgage payment.

In other words, as you may have noticed if you were shopping for a home in the past two years, there is an ample supply of potential borrowers, just not an ample supply of homes. Increasing your credit score over the median scores shown here won't necessarily put you in a better position to buy a home as much as having your bid for a future home accepted by the seller, but it may help you qualify for a loan or secure a more favorable interest rate.