Americans’ average credit score rose seven points from 2020 to Q2 2021, reaching 695, the highest average in more than 13 years, according to Experian’s State of Credit report.
“The findings from this year’s report show something I’ve always believed: Americans are resilient, for the most part they make smart decisions in the face of adversity and they are agile in adjusting their financial habits when the environment or circumstances change,” said Alex Lintner, President, Experian Consumer Information Services.
Consumers across all generations except Gen Z lowered their credit card balances and utilization rates. They also missed fewer payments.
Minnesota held the highest average score, 726, while Mississippi held the lowest, 666. New Jersey had the highest number of credit cards and retail cards at 3.37 and 2.54 respectively, and Alaska had the highest credit card debt at $7,089. The U.S. average is $5,525. Texas had the highest retail debt at $2,248, compared to the U.S. average of $1,888.
But better credit doesn’t mean less debt. A QuoteWizard study showed Americans lowered their debt during the beginning of the pandemic, but it has skyrocketed since then. The New York Federal Reserve estimated that U.S. household debt rose to nearly $15 trillion in Q2 2021, the biggest jump in 14 years. It was primarily driven by mortgages.
The Experian report found mortgage debt increased in every generation, as low interest rates, remote work, and a desire for more space inspired people to move. In 2019, the average mortgage debt was $210,263. In 2021, it was $229,242.
“It’s becoming clearer that millennials are stepping into the homebuying phase in a big way. Once thought to be the generation of apartments and urban revival, many older millennials are now buying homes and moving to the suburbs much like their parents before them,” said Joseph Mayans, Principal Economist at Advantage Economics, LLC.
“This will have significant implications for the post-pandemic world, especially as work from home becomes more prevalent.”