What is the generation gap on credit?

Whether you’re wrapping up end-of-year paperwork, getting ready to create your 2014 budget, or preparing for tax season, something about this time of year inspires financial introspection. While you’re evaluating your own financial well-being – including your credit status – it may be helpful to know how other Americans are doing. The latest iteration of a popular credit study indicates that while Americans are doing well overall credit-wise, younger generations could stand to work on improving their credit habits.

Experian’s Fourth Annual State of Credit study evaluates the credit status and habits of four generations: the Greatest Generation (66 and older), baby boomers (47 to 65), Generation X (30 to 46) and Millennials (19 to 29). As you might expect, seniors fared best in the survey. Results for Gen Xers and Millennials, however, were mixed.

Millennials face the biggest credit and debt challenges, the survey indicates. Although they have the fewest number of bankcards of all the generations, and a low average balances of $2,682 on those cards, they also have high utilization ratios compared to card limits, an average debt of $23,332 and a higher rate of late payments than other generations.

“Millennials appear to need the most guidance to improve and build their overall credit health,” says Michele Raneri, vice president of analytics, Experian. “Members of the younger generation are still building their credit, but with the right combination of experience, credit education and choosing credit offers wisely, the 20s can be used as a time to demonstrate creditworthiness and build a positive credit history.”

Gen Xers could also use some help the study indicates. Their average debt amount of $30,039 is 7.7 percent higher than the national average – and the highest of all the generations. They also use their cards more and have the highest rate of late payments. These factors have likely contributed to their relatively low average credit score of 653.

Overall, older generations fare better, but baby boomers also show room for improvement. They hold the most bankcards and rely on them heavily, accruing the highest balances of all generations. Despite high balances, however, boomers still have an average utilization percentage and a low rate of making late payments. Their higher average credit score of 700 indicates that overall they are managing their debt well.

Seniors outpace all other generations in terms of highest credit scores (an average of 735), least amount of debt, low bankcard balances and lowest utilization. They are also paying bills on time and in full each month. Their good credit management has paid off, reaping them the highest credit scores throughout the country. Seniors in Mankato, Minn. hold the highest average score nationally – 757.

The average VantageScore for all Americans is 681, based on a range of 300 to 850. Nationally, average debt is $27,887, the average number of bankcards is 2.19 and the average balance on bankcards is $4,501.

“While the credit scores and average debt numbers have meaning, what is really important is for everyone, no matter what age or where you live, to understand the value of having positive credit references,” says Maxine Sweet, Experian’s vice president of public education. “No one should use credit to live beyond their means.