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A new study finds most millennials do not have qualifying credit scores and need to improve borrowing habits.

Eighty-six percent of millennials recently surveyed say they believe that buying a house is a good financial investment, according to the National Association of REALTORS®’ data. However, Experian’s research shows that only 15 percent have a mortgage today. Further, 61 percent of millennials are near prime or worse and may need to improve their personal loan and bankcard usage habits in order to obtain lower rates for when they are ready to take out a mortgage.

Key study findings

In the U.S., the average consumer VantageScore® is 677 and credit scores generally become more prime (661-780) as people age. Younger millennials (age 22-28) have an average near prime score of 652 with older millennials (age 29-35) at the prime score of 665.
Millennials without a mortgage have an average age of 28, income of $33,000, 623 VantageScore and eight trades on file. Of them, 39 percent are viewed as prime or better (661 or higher).
Personal loan originations are dominated by older generations. Over the last four years, millennials account for 21 percent of all new personal loan dollars with a 40 percent increase in balances since 2011.
Younger millennials have an average per loan balance of approximately $7,300 while older millennials have an average balance of approximately $11,700.
Nationally, delinquency rates on personal loans are on the decline at 1.32 percent. Millennial delinquency rates as of 4Q17 stand at 2.08 percent for younger millennials and 1.51 percent for older millennials.
As of the fourth quarter in 2017, millennials account for 20 percent of new bankcard dollars. On average, younger millennials carry a balance of just under $3,000 with older millennials carrying approximately $7,500. Millennial bankcard delinquency rates are higher than the U.S. average of 1.54 percent at 2.33 percent for younger millennials and 2.18 percent for older millennials.

Today’s millennial homebuyer

In the last quarter of 2017, millennials accounted for 23 percent of newly originated mortgage dollars. On average, millennial homebuyers are 31 years old with an income of $64,000. The average mortgage balance for younger millennials is $167,000 and $210,000 for older millennials.

When it comes to credit scores, 77 percent of millennials with a mortgage have a 661 VantageScore or greater with an average score of 716 and 16 trades on file. Geographically, millennial homebuyers are most prevalent in the south and west regions where three-four percent of the millennial population have a mortgage.

Posted on: Nov. 2, 2018, 11:50 a.m. UTC

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