The Generational Debt Gap

Baby boomers boast high credit scores while Generation X tips the scales on debt.

February 22, 2012

From young adults learning the financial ropes to those embarking on their golden years, Americans vary widely in how much debt they take on, the types of debt they carry, and how they manage credit.

Experian’s Generational Credit Trends Report provides a snapshot of Americans’ debt balances and credit behaviors, illustrating that the generation gap goes beyond music, fashion, and politics.

The report examines four groups: the Greatest Generation (ages 66-plus), baby boomers (ages 47 to 65), Generation X (ages 30 to 46), and Generation Y (ages 19 to 29).

Results indicate that baby boomers are strong and steady in their pursuit of the American dream, while Gen Y’ers are starting to make their way by building credit with student loan and auto loan payments.

The study reveals Generation X has the highest amount of debt and second to lowest credit scores, while the Greatest Generation is reducing its overall debt and has the highest average credit score of all of the generations.

The nation’s average debt (including first and second mortgages, auto and student loans, and revolving accounts) is $78,030 and the average VantageScore is 751:

Generation Average Debt Average VantageScore
Greatest Generation $38,043 829
Baby boomers 101,951 782
Generation X 111,121 718
Generation Y $34,765 672

“The gap between the highest and lowest average credit scores is vast—829 for the Greatest Generation to 672 for Generation Y—yet the amount of average debt for these two groups is very close,” says Michele Raneri, Experian’s vice president of analytics. “On the other hand, the baby boomers and Generation X are carrying about three times more debt than the Greatest Generation and Generation Y.”

Each generation’s largest debt contributor is the first mortgage with Generation X (76.3%) exceeding the national average by 5%:

  1st Mortgage 2nd Mortgage Credit Card Auto Loan Student Loan Avg. Debt
66.6% 13.4% 6.7% 5.2% 0.7% $38,043
Baby Boomers 72.1 10. 4.7 4.8 1.4 101,951
Generation X 76.3 5.9 4.1 5.8 3.3 111,121
Generation Y 59.9 1.4 6.2 13.7 15.1 34,765
U.S. average 72.6% 8.3% 4.7% 5.8% 2.9% $78,030

The study also reveals:

• The Greatest Generation has less than half the debt of baby boomers and Generation X but proportionally, its highest debt burden falls in the mortgage category (66.6%), followed by second mortgages (13.4%), and credit cards (6%).

This generation tends to favor credit cards, with its debt in this category coming in at 43% more, proportionally, than the national average.

The Greatest Generation also dominates 36 states with its high VantageScores and the study’s highest score—855—in Minnesota. Even the Greatest Generation’s lowest score (783, in Washington, D.C.), is higher than the national average.

• Baby boomers tend to be equal to or under the national average in nearly every category with the exception of second mortgage debt, which is proportionally 23% higher than the national average.

At the state level, baby boomers in Mississippi have the lowest average credit score (736), while those in North Dakota have the highest (826).

• The largest percentage of Generation X’s debt isin mortgages (76.3%), second mortgages, (5.9%), and auto loans.

The highest Gen X credit scorers are in Minnesota (759) and the lowest are in Mississippi (667).

• Generation Y shows some major shifts when it comes to where its largest debts are. Mortgages contribute to 59.9% of Gen Y’s debt load, followed by student loans (15.1%), auto loans (13.7%), and credit cards (5.2%).

While having the smallest amount of debt overall in the study, proportionally, this generation’s debts compared to the national averages are significantly different. Gen Y’s debt is 17% lower for mortgages but 421% higher for student loans, 136% higher for auto loans, and 24% higher in credit cards.