What Millennials with the Highest Credit Scores Have in Common

June 9, 2016

Recent college graduates have probably read enough articles about how to improve their credit scores and live happier lives to write a dissertation. Those guidelines are important and we can’t stress enough how essential it is to monitor your credit score, pay bills on time and maintain low balances in order to build and maintain credit standing.

What is not as clear to many is what it means for a millennial to have a credit score* that will pave the way for a post-school life that includes credit cards, auto and home loans with more favorable interest rates, approvals from landlords and even a more attractive profile for employers who include credit in the background check. For many there hasn’t been enough time to establish a long credit history and a mortgage is probably only possible for a small percentage of 18 to 34-year-olds. What is the mix of type and amount of credit and credit usage that generally results in scores in the three highest bands?

Credit Karma looked at the average credit card usage, limits, number of cards, inquiries and collections, plus amount of credit card, mortgage, student loan and auto loan debt for the millennials in our membership of more than 50 million people to try to determine what mix resulted in higher credit scores.

Some trends were as you would expect (generally, the higher the credit score the lower the percentage of credit card usage. Alternatively, the lower the score the higher the percentage of collections), but some might be surprising (the percentage of student loan debt did not very greatly between the scores).

Those with Excellent credit scores (750+) on average:
• Have between four and five open lines of credit (99.9% of millennials with credit in the highet score range have at least one credit card)
• Use only 8% of their available credit
• Have credit card limits totaling over $26,000 across all cards
• Have outstanding credit card balances totaling less than $2,000 across all cards
• 22% have mortgages
• 34% have outstanding student loans (average total of just over $35,000)
• 40% have an auto loan (average loan of just over $15,000)
• 68% have at least one inquiry on their record
• Fewer than 1 percent have any collections on their record

Compare that to millennials with credit scores in the next highest range of Good (700-759) who on average:
• Have three to four open lines of credit (98% have at least one credit card)
• Use 20% of their available credit
• Have credit card limits totaling just over $40,000 across all cards
• Have outstanding credit card balances totaling less than $3,000 across all cards
• 16% have mortgages
• 39% have outstanding student loans (average total of just under $32,000)
• 43% have auto loans (average loan of $17,000)
• 79% have at least one inquiry on their record
• Only 5% have any collections on their record

Millennials with credit scores in the range of Fair (640-699) on average:
• Have between three and four open lines of credit (for those 86% who have credit cards)
• Use 39% of their available credit (for those 86% who have credit cards)
• Have credit card limits totaling less than $10,000 across all cards (for those 86% who have credit cards)
• Have outstanding credit card balances totaling less than $4,000 across all cards (for those 86% who have credit cards)
• 11% have mortgages
• 43% have outstanding student loans (average total of under $30,000)
• 49% have auto loans (average loan of just over $18,000)
• 83% have at least one inquiry on their record
• 19% have at least one collection on their record

These profiles can help people focus on the aspects of their credit usage to focus on to meet their long-term financial goals. For more information on building and maintaining credit, check out the articles on Credit Karma.

*Credit score data is based on TransUnion VantageScore 3.0 credit scores of the 18-34-year-old portion of the more than 50 million Credit Karma members who were active after 1/1/2015. All data was aggregated and anonymized.