Why Young Adults Have the Lowest Average Credit Score

A bunch of young adults leaning against a wall on their phones.

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Getting a good credit score is tougher when you're young, but it's not impossible.

Getting a good credit score is tougher when you're young, but it's not impossible.

Consumers of any age can have credit score struggles, but those difficulties are most common among young adults. Americans in the 18-to-29 age range have an average FICO® Score of just 659, which is the lowest of any age range and 45 points lower than the overall average credit score of 704.

Fortunately, there are plenty of ways for young adults to buck this trend. Here are the four biggest reasons why this group has a lower average credit score, along with what you can do to build a high score.

1. It's harder to get approved for a card

The most effective way to get good credit is by using a credit card. It builds your credit history and, if you pay the bill on time, you also build a track record of on-time payments.

One challenge for young adults is getting approved for a card in the first place. Since this group has limited credit history and possibly limited income as well, they'll have trouble qualifying for any of the top credit cards. That lack of a credit card holds them back from improving their credit scores.

If you're in this situation, it's a matter of finding the cards you can qualify for. Two of the most popular options for young adults are:

  • secured credit cards, where you pay a security deposit to open the card; and
  • student credit cards, which are available to college students.

You can also ask a family member to cosign your credit card application.

2. They have shorter credit histories

Credit scoring systems look highly on lengthy credit histories. Someone who has been using credit for 10 or 20 years will rate as more trustworthy than someone who has only used credit for a year or two.

There's no workaround for this. The only path to extend your credit history is time. You can, however, avoid shooting yourself in the foot along the way. It's not just your overall credit history that matters, but also the average age of all your credit accounts. That means you shouldn't open too many new accounts or close your oldest accounts, because both will lower your average account age.

3. They're more likely to pay late

Late payments have a very negative effect on your score. A late payment can affect your score once it's 30 days late. At that point, your account is considered delinquent, and the creditor will report it to the credit bureaus. If you go 60 to 90 days without a payment, the late payment will have an even greater impact on your credit.

This is an area where young adults are more prone to issues than older adults. Delinquency rates on credit card payments are significantly higher among those under 30 than any other age range, and that's one of the primary causes of their lower credit scores.

On the bright side, this is one scoring criteria that's 100% under your control. Avoid charging more than you can pay back and keep track of when your bill is due. You can also set up auto-pay to ensure you never miss a payment.

4. They don't have as much available credit

Credit card companies are often wary about extending credit to young adults, especially when they don't make much money or when it's their first credit card. For that reason, you'll likely start out with a credit limit of $1,000 or lower.

The problem with a low credit limit is that it becomes harder to keep your credit utilization down. Even charging a few hundred dollars to your card could push your credit utilization too high and hurt your score.

To avoid this, be cautious about how much you charge to your credit cards, and make sure your balances never exceed 20% to 30% of your credit limit.

Don't let your age hold you back

Several factors make it harder to build credit as a young adult. At the same time, there's no shortage of consumers in their 20s who have achieved excellent credit scores. If you pay your credit card bill on time and don't use too much of your credit, you're sure to join that group.

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