What would you do if you had a lot of credit data and wanted to help educate people on how to be better with credit and debt? You’d probably pore through the data, try to find some trends, and then share those trends with the world. It’s something a lot of credit bureaus try to do and the latest entrant is Experian’s generational debt infographic, a sprawling image that compares the credit and debt statistics of four generations. Scroll down to see the infographic displayed in the post.
Generation X is one of the identified generations, for those ages 30 through 46, and what is surprising is that they led the way in average total debt. They included all debts in this calculation, from student loan to credit card to mortgage loans, and Generation X led the way. In a close second place were the Baby Boomers, who are the next oldest generation at ages 47 through 65.
Experian found that Generation X had 42% more total debt compared to other generations, which isn’t surprising because it’s around that age where you start really taking on debt in the form of a mortgage. A quick peek at Generation Y, ages 19 through 29, and you’ll see that it’s likely that high student and auto loans carried over and, when coupled with mortgage loans, led to the higher debt load.
Another statistic that was staggering was how prevalent student loans were for Generation Y – an amazing 420% over average. This can be attributed to age, younger people are more likely to still have student loans, and the rising cost of education. With fewer years since graduation, it’s not surprising that many Gen Yers have a lot of student loan debt.
In looking at credit scores, it’s not surprising that the older you are, the better your score. While your age isn’t a factor in determining your credit score, many of the factors that do make an impact are affected by time. The longer your account history and payment history, to the extent you have good behavior, the better your score. The older you are, the more time you have to build that history of good credit behavior. I don’t usually take much stock in VantageScore but since FICO is governed by Fair Isaac, I have to assume Experian didn’t have access to that data to make a comparison based on that.
Finally, the fact that the Greatest Generation, aged 66 and above, still had nearly $40,000 in debt was somewhat scary. While the bulk of that was in 1st and 2nd mortgages, it’s still surprising to see someone in retirement having to service such a high level of debt. It could just be the product of the environment, it’s easy to have a mortgage with interest rates so low, but perhaps that’s a trend we could see diminish over time.
The infographic contains just the highest level data they collected, they put up a new site at livecreditsmart.com that contains some more information for those stats junkies out there (such as the highest credit scoring cities and states, trends, etc.).
What statistics did you find interesting from the infographic?
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
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Jeremy, we have a crisis on our hands. This is scary - future retirees (if not retirees already) shouldn't have $40,000 in debt already. I'm worried that will only grow to be greater, especially as old folks rely more on their home equity to pay for retirement with reverse mortgages. Gen-Y needs to learn a lesson from the older generations - it's not what you make, but what you make of it. Keep that cash close to home!
"What would you do if you had a lot of credit data and wanted to help educate people on how to be better with credit and debt?" Really? Based on that figure, the average Gen Y kid has $14,000 in unsecured, worthless debt that's given them no assets and, based on the current job market, hasn't improved their long term earnings potential. Also the Boomers, who are supposed to be acquiring wealth, are mired in 100k of debt, and they're "Strong and Steady in pursuit of the American dream"? What a load from the same geniuses that brought us the subprime crisis, and the housing bubble. Of course the credit companies are rejoicing and saying you're "strong and steady" in 100k of debt -- they make money selling your credit history to lenders.
I've always wondered about putting people in such large buckets, the person I was at 21 is not the same as the one from 25 or 29... I feel like life is "faster" when you're younger. I suspect my life situation isn't going to change much when I'm in my 40s compared to when I was in my 20s.
It's interesting that they've grouped this by generation. As you point out, this snapshot is more likely a reflection of where these generations are in their life cycle as opposed to any differences between the generations. It would be interesting to see how the generations compare at the same points in their lives. (The graphics they chose to represent each generation are interesting too...but that's off topic.)
EXACTLY. It is NOT OK to enter retirement with debt. If you're 50 and have debt, when are you going to pay it off? You'll probably never be making more money than right now. If you're a GenY who has consumer debt/student loans, when are you going to pay it off? After you buy a house and have kids? It's propaganda like the above infographic that encodes debt as "empowering", when really it should be seen for what it is: indentured slavery.