I’m sipping my coffee and reading about Kelly Klein, who managed to pay off her $100,000 student loans in just 10 years. I’ve got to say, folks, that’s impressive. She’s 31 years old and has a pristine credit score to boot. I’m not sure what’s more surprising, the fact that she paid off her debt or that she’s a Millennial who doesn’t live in her parent’s basement.
I’m reading that Kelly put every commission check she earned for six years towards paying off her debt. That’s dedication. And it paid off, literally. She’s now debt-free and has a retirement account that’s looking pretty good. I’m not sure what kind of financial wizardry she used, but I’m taking notes.
It seems that younger Americans, like Kelly, are actually doing better than expected when it comes to credit scores. According to FICO, Americans between 18 and 29 have higher credit scores today than they did before Covid-19. That’s a 17-point increase, which is the biggest among any age group. I guess you could say they’re learning from their parents’ mistakes.
Experts say that younger Americans have benefited from better education about the importance of protecting credit scores. Matt Schulz, chief credit analyst at LendingTree, says that Gen Z is “pretty savvy about credit” and that they’re more aware of credit scores because of the economic headwinds they’ve faced. I suppose that’s one way to look at it. Maybe they’re just more responsible than my generation.
I’m also reading that younger borrowers are at the beginning of their credit journeys, which gives them room to grow their credit scores. FICO says it doesn’t take age into consideration when scoring borrowers, but it does evaluate how long someone has been able to make payments on time. That makes sense, I guess. It’s like when I was learning to drive – my parents were a bit hesitant to let me behind the wheel, but once I proved myself, they gave me more freedom.
The article goes on to say that there are disparities beneath the surface, though. For instance, the score distribution for 18-29 year olds has shifted towards both higher and lower scores. In other words, some young people are thriving, while others are struggling. It’s a K-shaped economy, as Tommy Lee, senior director at FICO, puts it. I suppose that’s just the way the cookie crumbles.
One pressure facing younger Americans is the spike in housing costs driven by elevated mortgage rates and record-high home prices. The average monthly mortgage payment for a first-time homebuyer is 57% higher than in 2019, according to FICO. That’s a pretty steep increase. And then there’s the return of student debt payments and credit bureau reporting after a Covid-era pause. As of April, about 3.2 million Americans with a student loan payment due had a recent delinquency reported in the prior six months.
I’m not sure what the solution is, but it’s clear that younger Americans have their work cut out for them. Schulz stresses that missed payments can carry severe consequences that can haunt borrowers for many years. I suppose that’s a good reminder to stay on top of those payments.
In conclusion, it’s interesting to see that younger Americans are doing better than expected when it comes to credit scores. Kelly Klein’s story is a great example of what can be achieved with dedication and responsible financial planning. And let’s be real, folks, it’s not like they have a choice – they’re going to have to navigate this crazy economy somehow. So, here’s to the young folks: may they continue to thrive and may their credit scores forever be high. 🙏
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
