It’s harder for younger people to attain a high credit score because building a strong credit history takes time. The average credit score by age 25 is 680, but by age 59, the average credit score rises to 745, simply because there has been more time to establish credit. Luckily, a young person can work to build their credit score even when time is not on their side.
Here’s a detailed look at what a credit score is, the average credit score by age 25, how a credit score is used, and how you can build and take advantage of a good credit score.
Key Points
• By age 25, the average credit score in the U.S. is usually between 630 and 680, though it can vary based on factors like income, location, and financial habits.
• Young adults’ credit scores are often impacted by limited credit history, student loans, and high utilization on credit cards, as they are still establishing responsible credit use.
• Establishing good financial habits, such as paying bills on time, keeping credit card balances low, and building credit history through secured or low-limit credit cards, can help improve credit scores by age 25.
• Higher-income young adults tend to have slightly better credit scores, largely because they may be able to pay down debt faster and manage credit utilization more effectively.
• A solid credit score by 25 can help young adults secure lower interest rates on car loans, credit cards, and potentially even qualify for a mortgage, saving money in the long run.
Average Credit Score by Age 25
The average credit score by age 25, which is Generation Z, was 680 in the second quarter of 2023, according to Experian.
Many factors go into calculating credit scores, but a major factor is credit history. It takes time to build a credit history that reflects good financial habits, which might explain why the youngest age group typically has the lowest credit scores.
That said, younger people tend to have more diversified borrowing habits, and they tend to take advantage of loans, which improves their credit mix. According to OpenLending and TransUnion’s “Financing the Future” report, Generation Z and millennials are more likely to move up to higher credit tiers at a faster rate than older generations because of their borrowing habits.
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What Is a Credit Score?
Your credit score is a number that reflects how well you manage your debt. The two scores used most are your FICO® score and your VantageScore. These scores are calculated using data collected by three main credit rating agencies: Equifax, Experian, and TransUnion.
Lenders access your credit score when you apply for a loan or a credit card to assess how much of a risk you pose as a borrower. They look at how regularly you have paid loan payments in the past, how much credit card debt you have, and how likely you are to default on a loan. The riskier a lender perceives you, the higher the interest rate you will pay on a loan.
The scores you receive from the credit bureaus can vary because each bureau has different information about your credit. By law, you can get a free credit report each year from the three credit reporting agencies.
Recommended: How Long Does It Take to Build Credit?
What Is the Average Credit Score?
The average credit score in the U.S. was 715 in 2023, which falls in the good range. Scores vary widely by age, with younger adults generally having lower scores due to shorter credit histories. Averages can also fluctuate based on economic trends, credit usage habits, and broader financial influences across demographics.
Average Credit Score by Age
| Generation | Age | Average Credit Score |
|---|---|---|
| Gen Z | 18 to 26 | 680 |
| Millennials | 27 to 42 | 690 |
| Gen X | 43 to 58 | 709 |
| Baby Boomers | 59 to 77 | 745 |
| Silent Generation | 78+ | 761 |
As mentioned above, the older you are, the more time you have had to build a solid credit history. So it makes sense that older people will have better average credit scores.
But younger people tend to be open to a diverse range of loans, such as personal loans, credit cards, and student loans. When they use them responsibly, they move up to higher credit tiers at a faster rate than older generations.
What Is a Good Credit Score for Your Age?
You can consider yourself in good financial shape if your credit score is above the average for your age group. The average credit score for people aged 18 to 26 is 680, so a score between 680 and 690 is categorized as good for someone aged 25.
Recommended: What Is the Starting Credit Score?
How Are Credit Scores Used?
Your credit score becomes relevant when you begin taking out loans and using credit cards. Lenders use your credit score to get an overall picture of how responsible you are with debt, meaning you pay off your credit card balances on time and manage your bills responsibly.
Credit scores are used by lenders to decide loan terms. For example, you will get a lower interest rate and more favorable loan terms if you have a high credit score.
If you’re married or you have a loan with a cosigner, the credit score for both you and your spouse or cosigner will be used to decide the loan terms.
As an illustration of how your credit score is used, suppose you want to borrow $300,000 in the form of a fixed rate 30-year mortgage. If your credit score is high (around 760 to 850), a lender might charge you 7.43% interest for the loan. According to a mortgage calculator, this would mean a monthly payment of $2,083. If, however, your credit score is low and around 620 to 639, lenders might charge you 8.80% interest. That would mean a $2,370 monthly payment.
Factors Influencing Your Credit Score
The three credit bureaus use a scoring system that takes five components into account and applies weight to each component. See the table below from the Financial Industry Regulatory Authority.
| Component | Weight |
|---|---|
| Payment history | 35% |
| Amount of debt you have | 30% |
| Length of your credit history | 15% |
| Type of credit | 10% |
| New credit inquiries | 10% |
Payment History
Your payment history is your track record for paying back your debts on time, such as credit cards, auto and student loans, and mortgages. Bankruptcies, foreclosures, liens, and judgments also feature here. A history of prompt payments of at least the minimum amount due helps your score. Late or missed payments hurt your score.
Debt
Lenders look at your credit utilization rate, which is how much credit you use versus how much credit is available to you. Ideally, you will use less than 30% of the credit available to you in the form of credit card limits and other loans.
Length of Credit History
The length of your credit history refers to how long you have had and used credit. The longer your history of responsible credit management, the better your score will be because lenders have a better opportunity to see your repayment pattern. If you have paid on time, every time, then you will be in an excellent position. For young people, it’s important to build a credit history early by using credit responsibly.
Type of Credit
Type of credit is your credit mix or the diversity of loans and credit you have. For example, your credit mix might include credit cards, retail accounts, installment loans, finance company accounts, and a mortgage. Managing a mix of loans can help build your score.
New Credit Inquiries
Each time you apply for a new loan or a new credit card, the lender or provider will do a hard inquiry into your credit history. A number of new credit inquiries tells potential lenders that you intend to take on more debt. This will increase your credit utilization rate, making you a potentially risky borrower.
Recommended: Factors That Affect Your Credit Score
How to Strengthen Your Credit Score
Good credit management leads to higher credit scores, which in turn lowers your cost to borrow. To strengthen your credit score, live within your means so that you don’t have to go into debt. Take advantage of credit cards and loans, but make timely payments. In the case of credit cards, pay off the balance each month so you don’t pay interest.
How Does My Age Affect My Credit Score?
Your age isn’t taken into account in your credit score directly, but the age of your various credit accounts makes up 15% of your FICO score. The following factors apply:
• How old your credit accounts are (the age of your oldest account, your newest account, and the average age of all your accounts)
• How long ago accounts were established
• How long accounts have been unused
In a loose sense, your age does affect your credit score — but only to the extent that the younger you are, the likelier it is that you have a shorter credit history because there isn’t much for lenders to go on yet.
At What Age Do Credit Scores Improve the Most?
Consumer credit scores typically improve between ages 30 and 50, with the largest increases occurring in the late 40s and 60s.
By their 40s, consumers’ accounts have aged enough to warrant a higher score increase. However, people tend to have high debt levels in their 40s as they contend with mortgages, student loans, and credit accounts.
Tips for Building Credit
Building your credit history might seem daunting, but it’s doable with a few smart moves.
Check Your Credit Report
Checking your credit report regularly helps you spot errors or fraudulent activity that could harm your credit score. It also provides insight into your financial health, allowing you to address issues and improve your creditworthiness for future loans or financial opportunities.
Dispute Any Errors You Find
Once you have your credit report, review it carefully. Make sure all the debts listed are yours and that balances you’ve paid off are reported accurately. Don’t hesitate to dispute anything you think is incorrect.
Pay Your Bills on Time
Paying your bills on time is critical. It is the factor carrying the most weight in your credit score. Set yourself up for success with automatic payments or reminders so that you don’t miss payments.
Aim for a Balanced Credit Mix
If your credit history is on the shorter side, aim for a healthy credit mix. It accounts for about 10% of your FICO score and shows lenders how you handle different types of debt.
Get a Credit Card
Consider getting a credit card if you don’t already have one. Start with a secured credit card if needed — these are easier to get if you have little to no credit history. Pay the balance off each month to avoid paying interest.
Become an Authorized User
Another good step to build credit is to become an authorized user on someone else’s account, like a parent or a trusted friend. If they have a better score than you, it will help build your own score.
Avoid Credit Card Debt
Another factor that can drag down your credit score is high credit card balances relative to your credit limits, often referred to as your credit utilization ratio. Ideally, use no more than 30% of your total credit limit across all your cards.
Minimize New Credit Applications
Each time you apply for a credit card or loan, the lender will do a hard inquiry on your credit report. If a few inquiries occur in quick succession, lenders may worry you are taking on too much debt, and this can temporarily lower your credit score.
Recommended: How to Check Your Credit Score for Free
How Can I Get Credit Without a Credit History?
It may seem like you can’t get credit unless you already have it. So, what do you do when you’re just starting out? There are a few ways to begin building a credit history.
• Apply for a secured credit card. This requires you to open a savings account and keep a certain amount of money in it. The money in your account serves as security for your line of credit, and you can charge up to a percentage of that amount. As you make monthly payments on the account, it’s reported to the credit agencies, and you start building a history.
• Get a cosigner. Ask someone with an established credit history (such as a parent, grandparent, or guardian) to cosign your loan or credit application. You and your cosigner will both be responsible for the debt, so any related credit information will impact both of you.
• Be an authorized user. Be listed as an authorized user on a responsible person’s credit card. A lot of parents do this when their kids go to college. The parents’ credit history then goes on the student’s credit card profile and helps them get started.
Recommended: Guide to Building Credit With No Credit History
The Takeaway
The average credit score for a 25-year-old is 680, which is the lowest average among age groups. That’s likely because at age 25, you have not had much time to build a strong credit history. It’s important, then, that young people try to boost their credit score as soon as they can by using credit cards and other loans responsibly, maintaining a mix of credit types, and checking that the data on the report is correct. By law, you can access a copy of your credit report for free once a year from AnnualCreditReport.com.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
FAQ
What’s a good credit score for a 25 year old?
The average credit score for the 18 to 24 year old age group is 680, so anything above that could be considered a good credit score.
Is a 750 credit score good at 25?
Yes. A credit score of 750 is above average for someone aged between 59 to 77 (the average is 745), so it is definitely a good credit score for a young person who has not had much time to build a strong credit history.
What is the average credit limit for a 25 year old?
Here are the average credit limits for each age group, according to Experian’s 2022 consumer debt report, which is the latest data we have:
• Silent generation (77+): $32,379
• Baby boomers (58-76): $40,318
• Generation X (42-57): $35,994
• Millennials (26-41): $24,668
• Generation Z (18-25): $11,290
How rare is an 825 credit score?
According to Experian, nearly a quarter (22%) of Americans have a FICO score of 800 or higher, which the credit scoring company describes as exceptional.
What is the riskiest credit score?
The riskiest credit score from a lender’s perspective is a low credit score of 300 to 579.
What is the most respected credit score?
The FICO score is a more important score and the most common score used for borrowers seeking a loan. Lenders use it in over 90% of lending decisions.
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