Who Has The Most Debt?

Which Generation has the most debt?

In mid-February 2012, Experian, one of the three major U.S. consumer reporting agencies (CRAs), released their credit trends.  The study was conducted on four generation groups:  Greatest Generation (ages 66 and above), Baby Boomers (ages 47 to 65), Generation X (ages 30 to 46) and Generation Y (ages 19 to 29).  The study looked at debt, the amount owed, and the VantageScore^® for these groups.  Vantage Score is a credit score developed by the three major credit reporting agencies with scores ranging from 501 to 990.

According to the study, the average debt was $78,030 and the average VantageScore was 751.  Average debt for this study was calculated using first and second mortgage loans, auto loan/lease, other types of installment loans, as well as revolving accounts, but not necessarily a combination of all for each consumer. The average proportion carrying debt for all groups was: 72.6 percent with first mortgage debt, 8.3 percent with second mortgage debt, 4.2 percent with bankcard debt, .5 percent with retail card debt, 5.8 percent with auto loan debt and 2.9 percent with student loan debt.

The groups with the lowest debt are Generation Y and the Greatest Generation.  The Greatest Generation and the Baby Boomers had the highest average Vantage Scores as listed below:

Greatest Generation – average debt $38,043 – average VantageScore 829

Baby Boomers – average debt $101,951 – average VantageScore 782

Generation X – average debt – $111,121 – average VantageScore 718

Generation Y – average debt – $34,765 – average VantageScore 672

Highlights by Generation

The Greatest Generation is the oldest age group and has the highest average VantageScore of 829.  They had the second lowest average debt, which was almost 40 percent of that of Baby Boomers and Generation X. Most of their debt was in first mortgages (66.6 percent), second mortgages (13.4 percent) and bankcards (6 percent).  Bankcard debt was 43% more than the national average. They had the highest second mortgage debt with 13.4 percent carrying this debt compared to 10.2 percent for Baby Boomers.  The Greatest Generation had the highest Vantage Score in 36 states; the highest score of 855 was in Minnesota and the  lowest was 783 in Washington, D.C.

Baby Boomers were either average or below the national average in all categories except second mortgages, which was 23 percent higher than the national average.  Most of their debt was in first mortgages (72.1 percent), second mortgages (10.2 percent) and auto loans (4.8 percent).   This groups’ highest VantageScore of 826 was in North Dakota and the lowest was in Mississippi with 736.

Generation X had the highest average debt. The largest proportion of their debt in first mortgages (76.3 percent), second mortgages (5.9 percent) and auto loans (5.8 percent). Their highest VantageScore of 750 was in Minnesota and the lowest was in Mississippi with 667.

Generation Y is the youngest group and had the lowest debt and the lowest proportion of second mortgage debt. On the other hand, they had the highest proportion with auto and student loan debt.   First mortgages represented 59.9 percent of their debt, student loans were 15.1 percent, auto loans were 13.7 percent and bankcards were 5.2 percent.  Compared to the average, their mortgage debt was 17 percent lower, student loan debt was 421 percent higher, auto loan debt was 136 percent higher, and bankcard debt was 24 percent higher.  Their highest score was 705 in Minnesota and the lowest was 634 in Mississippi.

“For all consumers, establishing and maintaining a positive credit history is an important step in achieving financial goals,” said Maxine Sweet, vice president Consumer Education, Experian. “At any age, paying bills on time is the single most important contributor to good credit.”

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Report, Credit Score, Debt, Debt Consolidation, Debt Management, Money & Identity

This post was written by John Ulzheimer