Average Credit Scores by Gender

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Average Credit Scores by Gender

Almost everyone is aware of the discrepancies in earnings between men and women. This topic has been actively discussed and explored in the job market. But what about the disparity in lending and credit ratings that exists between men and women? This is a tough issue to assess because to regulatory changes that prohibit lenders from discriminating against groups based on demographics such as race, color, nationality, religion, and gender.

Although this information is not publicly accessible, we may draw some assumptions about credit scores and credit utilization by gender based on data published by several of the main credit reporting agencies, including Experian. In 2020, the corporation issued a detailed examination of the problem that broke down the gender disparity. In this post, we look at the statistics for men and women, as well as some historical context.

Key Takeaways

  • Historically, women faced several barriers to credit and were needed to have male cosigners and substantial down payments in order to get loans.
  • The Equal Credit Opportunity Act of 1974 outlawed a number of practices that limited women’s access to credit and capacity to be financially self-sufficient.
  • The average credit score of all genders is now the same.
  • Men and women have almost the same amount of credit card debt.
  • Men hold higher debt than women in all categories except student loans.

How the Equal Credit Opportunity Act of 1974 Changed Things

It’s hard to think that as recently as the 1970s, women couldn’t get a loan or qualify for credit without a male cosigner. In addition, if women purchased a property, they were often expected to make a greater down payment than male applicants with comparable credit histories.

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The Equal Credit Opportunity Act of 1974 was a crucial step toward abolishing gender discrimination in credit access. And, although there are still gender salary disparities in the United States, credit access and use among men and women are now roughly equal. The table below displays the disparity in scores and the average debt load for men and women based on type.

Average Debt and Credit Metrics by Gender
Debt/Credit MetricMenWomenDifference for Women
Average credit score705704– 1
Total debt balances$337,957$310,004– $27,953
Mortgage debt$211,034$192,368– $18,666
HELOC debt$ 47,017$ 42,746– $4,271
Auto loan debt$ 20,645$ 17,747– $2,898
Student loan debt$ 35,188$ 36,131+ $943
Personal loan debt$ 17,716$ 14,780– $2,936
Credit card debt$ 6,357$ 6,232– $125
Number of credit cards3.64.5+ 0.9

Women and Credit 2020: How History Shaped Today’s Credit Environment

This is not to argue that men and women apply for and utilize debt and credit in the same way. Indeed, males have greater total debt than women, including debt in almost every category. Women, on the other hand, have greater student loan debt and often use more credit cards. The next part delves a bit more into this.

In the second quarter of 2020, Experian increased the average credit score for women to 705 points.

There is no conclusive way to tell why there is a difference in credit ratings between men and women, or even whether one exists at all. This is mostly because of the ECOA.

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Any disparity in average credit ratings between men and women is not totally new. Both averages have increased by 10 points from the second quarter of 2015. Gender considerations are not taken into account in recent credit scoring algorithms.

There are some distinctions in how men and women acquire debt. Men carry around 9% higher debt than women on average: approximately $338,000 in overall debt amounts against $310,000 for women. This disparity is due to males having higher debt than women in all but one debt category. Men have 10% higher mortgage and home equity line of credit (HELOC) debt, 16% more vehicle loan debt, and 20% more personal loan debt than women.

Women, on average, have somewhat greater student loan debt than males. However, the increase in men’s student debt amounts is less than 3%. Women also carry more credit cards than males, with an average of 4.5 cards versus 3.6 cards. When it comes to credit card bills, the difference between the genders is just $125. This difference, at just 2%, is not deemed statistically significant.

The Bottom Line

Legislative developments in 1974 offered American women better access to credit, allowing them to get loans and credit cards without depending on male cosigners or being unjustly punished when obtaining a house loan. In the years following, women have made significant progress toward credit and debt parity, with average credit ratings that are comparable to men’s.

The gender mix of debt differs, with males taking on more debt for houses, vehicles, and other commodities, while women have taken on somewhat more student loan debt as a group. Although men’s overall average debt load is around 10% larger than women’s total debt, equal average credit ratings show that both genders take a similarly responsible approach to credit management.

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Methodology

Experian is one of the three main credit reporting agencies in the United States, and their 2020 study of debt and credit indicators by gender is based on aggregated data from millions of consumer credit files.

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