According to Experian’s annual state of credit report, adults in their 20s are struggling to manage their debt.
According to Experian’s annual state of credit report, adults in their 20s are struggling to manage their debt. Although they have low debt compared to the rest of the US population, they have the lowest credit scores and a very high incidence of late payments.
The report shows that young adults in their 20s have low overall debt ($23,000 per person on average compared to the average $28,000 per person on average). This debt includes credit cards, car loans, student loans, and other personal loans. Their average credit card debt is only $2700 in comparison to the average $4500. Millenials also have the fewest number of credit cards and the lowest average balance on them. However, the average young adult’s credit score is 628, while the average score is 681.
So why do they have such a hard time managing their debt?
Rod Griffin, the director of public education for Experian, explains that the younger generation has very high utilization of their credit. They have lower credit limits and tend to max out their cards often. With late payments, credit scores go down fast. Furthermore, with a high unemployment rate and a large amount of student loans, many use credit as a crutch in an emergency.
As 20 year olds continue to struggle with debt, we hope that they’ll learn to stop making late payments and manage their finances better.
Source: Experian
