One third of millennials who do not have a mortgage could use their prime credit score and this could help them qualify for one. According to the National Association of Realtors (NAR) and Experian data, only about one in six millennials has a mortgage. Of the remaining 85% of the millennial population, nearly two-thirds has a credit score of near-prime or worse. They may need to improve their personal loan and bankcard usage habits in order to obtain lower rates. This will affect millennial buying patterns substantially, given that nearly the same number (86%) say they believe buying a house is a “good financial investment.” “Prime” credit is considered to be 661 or higher.
Troubling Credit Behaviors
A new study from Experian indicated that most non-mortgage-holding millennials exhibit two “key themes” when it comes to credit: low scores and high delinquency rates.
Here are some key statistics from the study:
- At age 28, millennials without a mortgage have:
- Annual income of $33,000
- Average credit score 652
- Average loan balance between $7,300 and $11,700, depending on whether they are younger or older millennials, respectively.
- A much higher likelihood than the overall population to be delinquent on a bank card
- Millennial homeowners with mortgages have these characteristics:
- 31 years of age
- Annual income of $64,000
- An average mortgage balance of $167,000 to $210,000, depending on seniority (older millennials have higher balances)
- 716 average credit score