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Millennials Record Highest Credit Score Increase in 2020

Nearly a year into the COVID-19 pandemic, it's safe to say that virtually every American has been impacted in one way or another. And while everyone has had to deal with the changes brought about by stay-at-home orders and business closures, the financial impact has been greater for some than for others.

On average, measures of financial wellness in credit reports have improved over the past year—despite widespread unemployment and financial hardship during the economic downturn. There's a contrast when looking at a generational breakdown, however, with younger people's debt balances growing much much more over the past year than older generations'.

Across the country, credit scores have increased, some debt has decreased, and payment delinquencies have slowed since the beginning of the pandemic. These trends reduced the number of subprime consumers and have helped members of all age groups increase their credit scores.

Generational Credit Shows Change Since the Onset of COVID-19

Credit is consumed differently across all generations. Younger Americans typically have lower debt balances and credit scores. Debt levels generally peak in a person's mid-50s, and then decrease as they head toward retirement. Credit scores are shown to grow throughout life, reaching a peak once consumers reach their late 70s on average.

Due to factors such as savings and job security, each generation is positioned differently to weather an economic downturn like the one spurred by the COVID-19 pandemic. And as expected, since the beginning of the COVID-19 crisis each generation has seen nuanced changes in their credit reports.

Between the third quarter (Q3) of 2019 and Q3 2020, the change in credit report data showed measurable differences for all generations compared with years past. Younger generations saw the largest swings: Millennials experienced the largest growth in their average FICO® Score , while Generation Z added the most to their total debt.

Looking closer, much of this annual change occurred during the early days of the pandemic, Q1 2020 through Q3 2020, underscoring the impact the crisis has had on American finances—even if credit reports are not showing widespread negative impact for the time being.

As part of our ongoing review of debt and credit in the U.S., Experian compared consumer credit report data from Q3 2019 and Q3 2020 to see which generation experienced the most change since the start of the pandemic. We also compared data from Q1 2020 and Q3 2020 to understand how much of the change occurred after the beginning of the pandemic. Read on for our insights and analysis.

Gen Z Increases Average Total Debt by 56%

While younger consumers technically have the same access to credit that older generations do, they often lack the income and borrowing history needed to obtain larger loans and higher credit limits. As a result, members of Generation Z—consumers ages 18 to 23—tend to carry smaller balances across fewer accounts. During the pandemic, their total debt grew faster than any other generation.

From Q3 2019 to Q3 2020:

  • Generation Z's average total debt balance increased by 56%.
  • Generation Z's average FICO® Score grew by six points.

From Q1 2020 to Q3 2020:

  • Generation Z's average total debt balance increased by 39%.
  • Generation Z's average FICO® Score grew by four points.

By Q3 2020, Gen Zers' average total balance spiked to $16,043—a big jump from the same quarter the prior year but still just a fraction of the $140,643 average total balance held by Generation X, the most indebted generation. Though Gen Zers have a relatively small average total balance compared with other generations, they saw the largest increase in their overall debt since 2019—growing their average total balance 56% in 2020.

And while the youngest generation's balance has been growing quickly—between 2018 and 2019, their total debt grew by 23%—2020's growth was more than double that, underscoring the difference of change recorded during the COVID-19 pandemic.

Change in Debt and Credit: Generation Z
Q3 2019Q1 2020Q3 2020Year-Over-YearQ1-Q3 2020 Change
Avg. FICO® Score668670674+0.8%+0.5%
Avg. credit card debt$2,304$2,197$2,044-11%-7%
Avg. personal loan debt$4,758$4,901$6,004+26%+22%
Avg. auto debt$14,537$14,781$15,724+8%+6%
Avg. mortgage debt$147,822$153,311$169,470+15%+11%
Avg. total debt$10,259$11,543$16,043+56%+39%

Source: Experian

Zooming in, two-thirds of this dramatic increase occurred between Q1 and Q3 2020, during which time Gen Zers grew their total average debt by $4,500. Compared with other generations, Generation Z's growth in debt greatly outstripped everyone else's, including millennials'. The second-youngest generation in our analysis saw the second-highest increase in average total debt since last year, with a growth of 9% from Q3 2019 to Q3 2020.

Generation Z also saw high growth in their personal loan balances compared with other generations, with their average debt climbing by 26% between 2019 and 2020. On top of this change in debt balances, Gen Z consumers saw their average FICO® Score increase by six points year-over-year.

Millennials See Biggest FICO® Score Increase of Any Generation

Where Gen Z was the frontrunner in the debt growth category, millennials led the pack in terms of average FICO® Score growth. This generation also saw the second biggest growth in total debt, and is tied with Generation X as the age group with the largest decrease in credit card debt in 2020.

From Q3 2019 to Q3 2020:

  • Millennials' average total debt balance increased by 9%.
  • Millennials' average FICO® Score grew by 11 points.

From Q1 2020 to Q3 2020:

  • Millennials' average total debt balance increased by 3%.
  • Millennials' average FICO® Score grew by nine points.

Millennial consumers—ages 24 to 39—improved their FICO® Score by 1.6%, or 11 points, between Q3 2019 and Q3 2020, according to Experian data. That's the biggest increase of any generation, and is nearly three times larger than the generation's four-point growth from 2018 to 2019.

Change in Debt and Credit: Millennials
Q3 2019Q1 2020Q3 2020Year-Over-Year ChangeQ1-Q3 2020 Change
Avg. FICO® Score668670679+1.6%+1.3%
Avg. credit card debt$5,034$5,061$4,350-14%-14%
Avg. personal loan debt$12,112$11,979$12,306+2%+3%
Avg. auto debt$18,415$18,633$19,011+3%+2%
Avg. mortgage debt$227,445$233,831$237,349+4%+2%
Avg. total debt$80,435$84,930$87,448+9%+3%

Source: Experian

Similar to Gen Z debt, millennials saw the bulk of the increase in their score occur after the onset of the pandemic, between Q1 and Q3 2020, during which time the generation's average credit score grew by nine points. Millennials joined Generation X as the only two generations that improved their scores by more than 1%.

Looking at debt, millennials also saw the largest decrease in credit card debt, reducing their balances by 14% between 2019 and 2020. It's notable that nearly all of this decline occurred between Q1 2020 and Q3 2020, emphasizing the fact that this decrease was out of the ordinary and likely spurred at least in part by the pandemic.

Gen X Sees Second-Highest Growth in FICO® Score

Generation X—the age group with the highest amount of debt—followed millennials as the generation with the second-largest increase in their FICO® Score in 2020. These consumers—ages 40 to 55—have improved their average score by 10 points since Q3 2019, according to Experian data.

From Q3 2019 to Q3 2020:

  • Generation X's average total debt balance increased by 3%.
  • Generation X's average FICO® Score grew by 10 points.

From Q1 2020 to Q3 2020:

  • Generation X's average total debt balance increased by 2%.
  • Generation X's average FICO® Score grew by eight points.

Other than FICO® Score growth, members of Generation X saw modest changes across other indicators. Compared with the changes they recorded between 2018 and 2019, the only standout area was in credit card debt. In line with the national trend, Gen X saw a 14% reduction in credit card debt since 2019. Of that, almost all of that change occurred between Q1 and Q3 2020, when their credit card balance shrank by 13%.

Change in Debt and Credit: Generation X
Q3 2019Q1 2020Q3 2020Year-Over-Year ChangeQ1-Q3 2020 Change
Avg. FICO® Score688690698+1.4%+1.1%
Avg. credit card debt$8,315$8,242$7,185-14%-13%
Avg. personal loan debt$17,355$17,121$17,733+2%+4%
Avg. auto debt$21,783$21,942$22,307+2%+2%
Avg. mortgage debt$239,022$241,800$247,564+4%+2%
Avg. total debt$136,505$137,923$140,643+3%+2%

Source: Experian

Baby Boomers Increase Total Debt Balance, After Reducing It in 2019

Of all generations, baby boomers saw the least change in their credit reports between 2019 and 2020. That said, they did buck a yearslong trend by increasing their total debt.

From Q3 2019 to Q3 2020:

  • Baby boomers' average total debt balance increased by 1%.
  • Baby boomers' average FICO® Score grew by four points.

From Q1 2020 to Q3 2020:

  • Baby boomers' average total debt balance increased by 2%.
  • Baby boomers' average FICO® Score grew by three points.

From 2018 to 2019, baby boomers saw their total average debt decrease by 2%, according to Experian data. That was typical, as baby boomer debt has decreased each year since 2012. But in 2020—specifically between Q1 and Q3—baby boomer debt increased.

In line with past years, between Q3 2019 and Q1 2020, baby boomers reduced their average total debt by 1%—from $96,448 to $95,539. From Q1 2020 to Q3 2020, however, this pattern of decline reversed course and members of the generation saw their total debt balance increase to $97,290, a growth of nearly 2%.

Change in Debt and Credit: Baby Boomers
Q3 2019Q1 2020Q3 2020ear-Over-Year ChangeQ1-Q3 2020 Change
Avg. FICO® Score732733736+0.5%+0.4%
Avg. credit card debt$6,911$6,734$6,089-12%-10%
Avg. personal loan debt$19,371$19,182$19,700+2%+3%
Avg. auto debt$18,889$18,912$19,306+2%+2%
Avg. mortgage debt$175,582$176,144$178,688+2%+1%
Avg. total debt$96,448$95,539$97,290+1%+2%

Source: Experian

This shifting pattern indicates that something during the pandemic may have caused a deviation from baby boomers' normal trajectory of reducing total debt each year. Credit report data shows that unlike between 2018 and 2019, when debt levels saw no growth year-over-year, baby boomers increased their average auto debt (+2%) and mortgage debt (+2%).

Silent Generation Only One That Decreased Overall Debt

The silent generation—the oldest age group in our analysis, consisting of Americans 75 and older—saw the least significant change of any generation since the onset of COVID-19. Given their age and pattern of shrinking debt, it comes as no surprise that the generation would appear more resistant to economic changes during the pandemic.

From Q3 2019 to Q3 2020:

  • The silent generation's average total debt balance decreased by 4%.
  • The silent generation's average FICO® Score grew by two points.

From Q1 2020 to Q3 2020:

  • The silent generation's average total debt balance decreased by 2%.
  • The silent generation's average FICO® Score grew by one point.

Though members of the silent generation appear to have continued their momentum of reducing their debt over many years, nearly half of the reduction in balances seen since 2019 happened between Q1 2020 and Q3 2020, according to Experian data.

Of the 4% reduction the generation saw in average total balance in 2020, 2% of this occurred from Q1 to Q3 2020. Compared with 2019, the silent generation also reduced debt at a higher rate. Between 2018 and 2019, these consumers reduced their average total balance by 3%.

Change in Debt and Credit: Silent Generation
Q3 2019Q1 2020Q3 2020Year-Over-Year ChangeQ1-Q3 2020 Change
Avg. FICO® Score756757758+0.3%+0.2%
Avg. credit card debt$3,843$3,699$3,277-15%-11%
Avg. personal loan debt$17,198$16,873$17,1230%+1%
Avg. auto debt$14,634$14,571$14,750+1%+1%
Avg. mortgage debt$133,066$133,377$133,827+1%0%
Avg. total debt$42,952$42,196$41,281-4%-2%

Source: Experian

Most Change in Past Year Occurred During Pandemic Period

Across all generations, one thing was clear: Much of the change in debt and credit from the past year occurred once the economic changes related to the pandemic took effect. Though there has been significant change since Q3 2019, in many cases, most of the change occurred from Q1 2020 to Q3 2020.

This pattern shows that—while not necessarily negative (yet)—the pandemic is having financial impacts that are being seen in consumer credit reports. As this analysis shows, each generation has experienced different change, and this trend will likely continue as the pandemic continues to impact consumer finances in coming months.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.