State of Credit

2017 was a year of contradictions for American consumers, based on Experian's eighth annual State of Credit survey. Higher average credit scores and higher debt offer reasons for both optimism and caution heading into 2018. A decade since the Great Recession crashed into the American economy our relationship with debt, credit and the future is... well, it's complicated.

That's why the rest of this report is devoted to digging much deeper into all these numbers.

First, the good news: the economy seems to have mostly recovered from the 2008 financial crisis. Housing prices and foreclosure rates are back to normal, and the unemployment rate is at a historic low.

Consumer confidence hit a 17-year high in late 2017 and holiday sales jumped nearly 5% vs. 2016, the largest year-over-year increase since 2011, according to Mastercard's SpendingPulse, which tracks retail spending -- excluding autos -- by all payment types. After a rocky few years, average credit scores began a steady climb in 2013. The average VantageScore was 675 in 2017, compared to 673 the year before and only four points from the 2007 average of 679.


Highest average credit score since 2012

Dig deeper into those credit score numbers, and there's even more good news. For the first time, there are more Americans with very high scores (Super Prime) than very low scores (Deep Subprime). For example, in 2017, 22.3% of Americans had Vantage Scores between 781-850 — a 6% increase versus 2016, and an improvement compared to five years ago when only 19.8% were in that range. Last year, 21.2% were below 600 — versus 22.6% in 2016 and 26.9% in 2012.

More Americans have super-high credit scores than very low credit scores


Super prime credit score


Deep subprime credit score

On the other hand, wages remain stubbornly flat, and the nation's homeownership rate is lower than it's been since the 1960s. The Federal Reserve's most recent monthly consumer credit report showed consumer borrowing (excluding housing) rose 8.8% in November, the most in more than two years, to $3.83 trillion.

Young people are waiting a long time to get married, to move away from their parents, and they're reluctant to buy cars. Credit card debt is creeping up again and so are delinquencies. For those who are buying homes, mortgage debt is up sharply, a reflection of fast-rising housing prices. About one-third of America's 44 million student loan debtors say they were late paying that bill at least once last year. And years of aggressive auto lending, particularly targeting subprime buyers, have led to a dramatic increase in delinquencies and repossessions.


Scroll through the table below for data on each state.

State of the States
StateAverage VantageScoreAverage # of Credit CardsAverage Balance on Credit Cards
District of Columbia6702.98$6,963
North Carolina6662.95$6,117
North Dakota6972.9$5,511
New Hampshire7013.1$6,490
New Jersey6863.49$7,151
New Mexico6592.79$6,317
New York6883.34$6,671
Rhode Island6873.26$6,375
South Carolina6572.9$6,157
South Dakota7002.8$5,692
West Virginia6582.76$5,547

The United States of Credit

Somewhere in the middle of these contradictions, between borrowers with record high credit scores and those facing higher debt, is a "typical" American consumer. You might be wondering where you fit in. So here's a picture of an average U.S. consumer today -- let's call her Jane Smith. Jane holds 3.1 credit cards, and has an average balance of $6,354. She also holds 2.5 retail credit cards with an additional $1,841 in balances. Her mortgage balance is $201,811, and her other debt -- mostly car loan debt -- totals $24,706. Her credit score is 675.

A note of caution about Jane: It's risky to use the word "average" to mean "typical" when talking about money. For example, credit card "balance" is a tricky number: Consumers with large balances who pay them off every month are in a very different situation than those who carry balances every month.

Also, regional differences mean a lot. A $201,000 mortgage would sound crazy to someone in rural Ohio, but downright cheap to someone in urban Seattle, for example.

Credit Snapshot of the Nation
Average VantageScore675
Average Number of Credit Cards3.1
Average Balance on Credit Cards$6,354
Average Number of Retail Cards2.5
Average Balance on Retail Cards$1,841
Average Mortgage Debt$201, 811
Average Non-Mortgage Debt$24,706

Speaking of regional differences...

Minnesota Has the Highest Credit Score, Mississippi Has the Lowest

There are regional differences in average credit scores. Minnesotans have the highest scores in the nation, averaging 709 -- above No. 2, Vermont, at 702. There might be some connection between cold weather and credit scores, as the next three-highest states are New Hampshire (701), South Dakota (700), and Massachusetts (699).

On the other side of the rankings, the four states with the lowest scores are all in the South. Mississippi ranks last at 647. Louisiana (650), Georgia (654), and Alabama (564) come next. Rounding out the bottom five is Nevada, at 655.

Minneapolis Has the Best Credit Score at 709

This cold weather theme sticks when examining the cities with the highest average credit score: Minneapolis (709), Rochester, N.Y. (708), Mankato, Minn. (708), and then Wausua (706) and Green Bay, Wisc. (705).

Cities with the lowest scores are all in warm climes. Greenwood, Miss. ranks last (624). Albany, Georgia (626) is next, followed by Harlingen, Texas, (631) Laredo, Texas (635) and San Bernadino, Calif (636).

Top 10 States with Highest VantageScores
StateAverage VantageScore
New Hampshire701
South Dakota700
North Dakota697
Top 10 States with Lowest VantageScores
StateAverage VantageScore
South Carolina657
West Virginia658

Where Credit Cards Are Used the Most

States with highest credit card debt are all in the Northeast, with one exception-- New Jersey, New York, Rhode Island, Hawaii, and Connecticut. States with the lowest credit card balances are Missouri, Iowa, Alabama, Oklahoma, and West Virginia.

New York, Los Angeles, and San Francisco make three of the five cities with the highest number of credit cards — but Alaskans have the highest balances. Fairbanks, Anchorage, and Juneau rank atop that list. Washington D.C. residents come in fourth. The least number of cards, and the lowest balances, are in places like Hattiesburg and Jackson, Mississippi; Alpena, Mich., and Wausau, Wisc.

Top 10 States with Highest Credit Card Debt
StateAverage Balance on Credit Card
New Jersey$7,151
District of Columbia$6,963
Top 10 States with Lowest Credit Card Debt
StateAverage Balance on Credit Card
North Dakota$5,511
West Virginia$5,547

Now let's review some generational differences...

Gen X Have the Most Credit Card Debt, Gen Z the Lowest Credit Score

It's no surprise that young people with few credit accounts ("thin" credit files) tend to have lower scores than older folks. Still, there's a dramatic difference between the youngest, Generation Z (born after 1996), and the oldest, the so-called Silent generation (born before 1946). Gen Z's average score is 634, while "Silents" are almost 100 points higher, at 729. Generation Y, also known as Millennials, (born 1982-1995) doesn't fare much better at 638, and Generation X (1967-1981) is 658. Only when the age scale reaches Boomers (1947-1966) does the average surpass 700 (703).


Average credit score for the Silent Generation - the highest among generations

Credit Snapshot by Generation
Silent GenerationBaby BoomersGen XGen YGen Z
Average VantageScore729703658638634
Average Number of Credit Cards3.
Average Balance on Credit Cards$4,613$7,550$7,750$4,315$2,047
Average Number of Retail Cards2.
Average Balance on Retail Cards$1,354$1,931$2,122$1,626$770
Average Mortgage Debt$156,705$188,828$231,774$198,302$160,411
Average Non-Mortgage Debt$15,161$27,513$30,334$22,784$6,963

Credit Card Debt Hits Record High

Credit card debt hit a couple of big milestones in 2017. First, in February, total debt surpassed $1 trillion for the first time since the Great Recession, according to the Federal Reserve. Then in June, it rose to $1.021 trillion, setting an all-time high. Is that good or bad? The answer is probably both.

Increased credit card spending might mean increased optimism about the future (and the ability to pay bills in the future). Or, it might mean consumers struggling with relatively flat wages feel an increasing need to use credit just to get to the end of the month. A Pew study found that just 46% of Americans earn more than they spend every month, suggesting that's true for a majority of Americans. That means increased likelihood that bills won't be paid.


State with the highest average late payment rate

San Francisco

City with the lowest average late payment rate

On average, Americans' credit card debt jumped 2.7% during the past year -- from $6,188 to $6,354. Some demographics saw much sharper rises, however. Gen X'rs balances are up 5.1%, from $7,372 to $7,750. Millennials' plastic debt climbed fully 10.8% from $3,894 to $4,315. On the other hand, card debt among the Boomers and the Silents stayed almost flat.


Average credit card balance for the top 10 most populated cities


Average credit card balance for the top 10 least populated cities

Retail credit card debt is also up — about 4% on average, from $1,768 to $1,841. There were similar increases across all age groups.


The data is consistent with other information showing that consumers — especially young adults -- enjoyed greater access to credit cards last year. Gen X, Millennials, and Gen Z all held more card accounts last year, Experian's data shows. According to the Consumer Financial Protection Bureau, "consumers opened around 110 million new credit card accounts in 2016, which is roughly 50% higher than 2010 and a higher total than in any single year since 2007."

Access to credit cards last year reached its highest level since 2005: a total of 181 million consumers had access to a card as of Sept. 30, 2017, according to Experian.


Number of credit cards that Baby Boomers hold - the highest average among generations


Number of credit cards that Gen Z hold - the lowest average among generations

Meanwhile, credit limits for the best credit card customers—those with particularly high (or superprime) credit scores—have also risen quickly. The average total credit line for superprime consumers rose from $29,176 in 2010 to $33,371 earlier this year.

Much of the growth in new accounts were subprime accounts, adding to the risk for delinquencies. The American Bankers Association (ABA) says that the average size of initial credit lines being granted to new subprime borrowers was growing at a faster rate than all other categories, and the CFPB says they are utilizing that credit. Average credit card debt is up 9% over the last two years, but for cardholders with deep subprime scores, it's up 26%.

With all this additional credit floating around, there's bound to be additional delinquencies, too — particularly given the harsh reality that wage gains are hard to come by and incomes remain stubbornly flat. The overall 90-day-plus delinquency rate of credit card debt was 7.47% of balances in the third quarter of 2017, up from 7.08% in the third quarter of 2016, according to the Federal Reserve Bank of New York. That's still far lower than the peak rate of 13.74% during the Great Recession, but the amount of newly-delinquent debt also rose -- a sign that bears watching.


Average revolving credit utilization for Gen Z and Gen X - tied for highest among generations

Not all the data is bad, however. Experian's data shows that credit card credit utilization is basically flat across all age groups, and averages 30% — the line experts say consumers shouldn't cross. Were consumers in distress, credit utilization would likely be rising, as buyers start pushing the limits of their credit cards. But credit card debt as a share of consumer disposable income isn't climbing, according to the ABA. In fact, it fell by a small fraction, to 5.3%, last year. That suggests consumers weren't struggling anymore to pay their credit card bills in 2017 than in the previous year.

What Is Credit Card 'Debt' Anyway?

Of course, not all credit card debt is created equal. Plenty of consumers use cards as often as possible, working to rack up rewards and cash back balances, but pay the cards off in full each month. Their balances don't really translate into debt, but some of these users end up in studies measuring credit card debt, anyway.

The ABA calls this group "transactors." They make up about 29% of account holders. They stand in stark contrast to "revolvers," who carry a balance and often pay high rates (The rest, who don't use their cards are called "dormants.") It's that second category of credit card holders, the revolvers, who bear the most watching as a signal that debt levels are growing too high. Currently, 43% of card holders carry a balance each month. Their ranks actually fell 1% in the second quarter of 2017, after rising slightly in the first quarter.

Should the ranks of revolvers steadily increase, that could be a sign of impending trouble.


Average number of personal loans originated from Corpus Christi, Texas - highest among all cities

Student Loans, Auto Debt and Bigger Signs of Trouble

Another worrisome sign: non-mortgage debt in general is up — and for young consumers, it's up a lot. That figure includes credit card debt and other forms of borrowing, such as car loans. For Gen Z, the youngest group, it's up a full 15%, from $6,034 to $6,963. Millennials' non-mortgage debt is up 9%, and Gen X by 5%.

The student loan story has been widely told, but it keeps getting worse.

Big student loan payments leave young adults little margin for error as they start their professional lives. But it's not just young people bending under the burden of student debt.


Average number of student loans originated from Lima, Ohio - highest among all cities

Americans over 60 are the fastest-growing segment of student loan borrowers, according to the Consumer Financial Protection Bureau. From 2005 to 2015, their average debt load doubled, from $12,100 to $23,500. Delinquencies in that group nearly doubled during that span, and the number of people seeing their Social Security benefits seized over student loans has more than quadrupled.

Of even bigger concern might be auto debt. Pressure on the auto sales market has led to dealers and lenders granting more loans to subprime borrowers, and extending loan terms to record lengths. In May, the Federal Reserve announced a record 107 million Americans held car loans. The average term was 68 months, up from 63 months a decade ago. The total car loan market reached $1.2 trillion, a record — and $300 million of that is held by subprime borrowers, two thirds by finance companies rather than banks. And according to the Fed, delinquencies among those borrowers have skyrocketed. It's roughly doubled since 2013 and now stands at just below 10%.

Millennials Are Getting into Mortgage Debt

In mortgage debt, the data seems to indicate that millennials -- Gen Y'rs -- are finally moving out of their parents' homes and buying their own. That's good news not just for the housing market, but also for plenty of retailers who sell things involved in household formation, like couches and silverware. For the first time last year, millennials made up the largest segment of homebuyers, according to Zillow, and half of all home buyers are now 36 and younger. That's a welcome shift from 2012, when young 30-somethings were more likely to live with their parents than in a home they owned -- and lived at home in the largest rate since the 1970s.


Average mortgage debt for Gen X - the largest average among generations

This big shift is obvious in debt data. Overall, U.S. average mortgage debt jumped last year from $196,014 to $201,811, a sizable 3% increase. The year-over-year increases for young Americans are huge, and a clear reflection of fast-rising housing prices. Millennials' mortgage debt was up 6.8%, from an average of $185,668 to $198,302, just in the past year.

Gen Xer's debt rose at the national average. Boomer and Silent debt was basically flat, which you'd expect. Average Gen Z mortgage debt dropped, but there are so few buyers in that age group, the data might be considered an anomaly.


3 Steps for 2018

There's a lot of uncertainty heading into the new year. There's plenty of disagreement over the economic impact of the Republican tax legislation, for example. And can the stock market repeat its remarkable run from 2017, or will it correct, as many predict? Many of these things are out of your control. There are a few things you can do, however.

  • Revolvers, pay down your balance. The single biggest step you can take immediately to improve your credit score is to pay your bills and pay down your credit card balances. Credit utilization — the amount of debt you hold relative to your credit card limits — is a major factor in your score. So if you are one of those 43% of Americans who are a revolver, work hard to get that utilization rate below 30%.
  • Use your tax cut to pay down debt. If you are lucky enough to benefit from the tax cuts, some of which are expected to show up starting with February paychecks, don't spend that windfall. Instead, consider taking that money and immediately using it to pay down credit card balances.
  • Be careful taking out new credit. You might still be struggling to make ends meet, but if you are tempted to open a new credit card account, do so judiciously. A new card might have a short-term negative impact on your score; if you pay it off regularly and use only a small portion of the credit limit, it can help your score long-term.

Click here for more on improving your credit score.

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