MReport November 2020

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50 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Millennial Snapshot: To Rent or Own? Recent data digs into the financial differences between millennial homeowners and their renting peers. M illennials, those between the ages of 24 and 39, now make up the larg- est share of homebuyers in the United States. Many millennials have been successful in acquir- ing home loans because of their strong credit scores. LendingTree released data com- paring credit files for millennials' who have purchased a home ver- sus those who haven't. This data comes from the credit records of MyLendingTree users through the third quarter of this year. The study determined that mil- lennial homeowners have higher credit scores overall than their renter counterparts. Millennials who have purchased a home have a median credit score of 693, com- pared to a median credit score of 601 for renters. This makes sense considering that those with higher credit scores can better qualify for loans and purchase homes. The data also shows that millennial homeowners have a greater variety in their credit than renters do. Millennial homeown- ers have a median of 9 accounts of varying types, while renters have a median number of 6 vary- ing accounts. Millennial homeowners are also far more likely to have a credit card balance than their rent- ing peers. Among homeowners, 91% have a credit card balance compared to 65% of renters. Homeowners also have more credit card debt, with an average of $9,255 in credit card balances, while renters owe an average of $4,843 in credit card debt. Renters have slightly higher credit usage (30%) in comparison to the median utilization rate of homeowners (23%). The data also shows that renters search for new credit more often, with an average of 2 inquiries over the past six months, while homeowners had 1.6 inquiries. Renters tend to have more difficulty with making payments toward their overall debt, with an average of 10 late payments on their credit profiles. In compari- son, homeowners have an average of 6 late payments. 53% of mil- lennial renters have at least one late payment in contrast to 44% of homeowners. Despite some millennials struggling to keep their credit scores up, some may still qualify for home loans. It is too soon to know the long-term impacts that the pandemic and economic turmoil it has caused will impact millennials' and Americans' credit scores across all generations. Which State Has the Highest Average Credit Score? A new analysis of each state's average credit score reveals which state's residents have stayed on top of their finances this year and which states have faltered. I n a new analysis of credits score averages per state, based on TransUnion data, WalletHub found which state outshined the rest for the highest average credit score and which states fell behind in 2020. WalletHub found Minnesota leads the nation with an average credit score of 720. This is a handsome distance from TransUnion's national credit score aver- age of 680 and was the closest among the states to the 750 level that is the beginning of the excellent credit score range. The Minnesota average outpaced the 709 average credit score shared by Hawaii, Washington, and North Dakota. South Dakota and Oregon followed with a 707 average credit score, with Montana just behind at 706. Massachusetts was the highest-ranking East Coast state on the WalletHub list with an average credit score of 705. At the other end of the spec- trum, Mississippi had the lowest national credit score average at 657. Southern states were among those with the lowest scores: Alabama (662), Louisiana (664), Texas (669), and Georgia (670). "This year, the COVID-19 pandemic has wreaked havoc on people's finances, leading many people to need to take out loans or fall behind on their payments," said Adam McCann, a financial writer with WalletHub. "While the government has taken some steps to protect people's credit scores, such as offering forbear- ance on federally- or GSE-backed mortgages, not everyone can take advantage of relief." The WalletHub study mostly mirrors a study previously released by Experian, which also placed Minnesota as the state with the highest credit score aver- age (720), and Mississippi as the lowest (658). The Experian study put the national credit score aver- age at 688, up six points from one year earlier. "This year, the COVID-19 pandemic has wreaked havoc on people's finances, leading many people to need to take out loans or fall behind on their payments" —Adam McCann, Financial Writer, WalletHub

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