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The average 40-something has a 676 credit score—what this expert says they're doing right and wrong

CNBC Select spoke with Experian's Rod Griffin about Gen X's credit behaviors.

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New Experian data finds consumers between the ages of 39 to 53 (aka Generation X) have a considerable gap in their credit scores when compared to older generations.

The credit bureau's 2020 State of Credit report shows that Gen Xers, with an average credit score of 676, are closer to the scores of Gen Y/millennials (658) and Gen Z (654) than they are to Boomers (716) and the Silent Generation (729).

"Credit scores tend to improve as people age," says Rod Griffin, senior director of public education and advocacy for Experian. But in order for Gen X consumers to reach the higher credit scores we see in older generations, they need to start focusing on two factors: lowering their credit utilization rate and paying their bills on time.

To get a better idea of how the average Gen X consumer manages their credit, below is a snapshot of Experian's most recent data highlighting this generation.

Experian State of Credit Report: Gen X

Experian 2020 findings Gen X
Average VantageScore®676
Average number of credit cards3.3
Average credit card balance$7718
Average revolving utilization rate32%
Average number of retail credit cards2.59
Average retail credit card balance$2353
Average 30–59 days past due delinquency rates3.3%
Average 60–89 days past due delinquency rates1.8%
Average 90–180 days past due delinquency rates5.3%

CNBC Select spoke with Griffin about his two big takeaways when you look at Gen X's borrowing behaviors.

1. Gen X has a high average credit utilization rate

According to Experian's analysis, the average Gen Xer has a revolving utilization rate of 32%.

"Gen X has reduced their credit utilization rate year over year, which is a good thing," Griffin tells CNBC Select. "However, at 32%, this is still the highest utilization rate of any generation and it contributes to the gap we have seen between Gen X's average scores and their older peers."

From youngest to oldest consumers, Gen Z and Gen Y/millennials both have a 30% CUR, Boomers a 24% CUR and the Silent Generation a 13% CUR.

Your credit utilization rate, or balance-to-limit ratio, shows how much of your available credit you use. If you use too much, lenders worry you may be relying too much on credit without being able to pay it off. This may very well be the case with Gen Xers. As Griffin points out, these consumers carry more nonmortgage, mortgage, credit card and retail card debt than any other generation.

When your credit card balance increases and goes unpaid, your CUR steadily rises as you come closer to reaching your overall credit limit. Experts generally recommend keeping your CUR below 30%, but a single-digit utilization rate (under 10%) is a better target if you really want a good credit score.

Having a low CUR will help increase your credit score, too. The amounts owed counts as 30% of your FICO Score calculation, so it's a huge factor. To decrease your utilization rate, start by reducing your credit card balances. Once you chip away at your credit card debt, you can then consider asking your card issuer for a higher credit limit to further help lower your utilization rate. (Just make sure a higher limit doesn't give you an excuse to run up more debt.)

Learn more: When to ask for a credit limit increase

2. Gen X has the highest rate of missed payments

While Gen X consumers have had fewer missed payments year over year, they still have a higher rate of missed payments than any other generation.

No matter your age, making your bill payments on time is key to maintaining good credit standing and an overall healthy financial future. In fact, payment history is the most important factor that determines your credit score. A solid score gives you access to the best credit cards and better loan terms when you want to take out a mortgage or a car loan.

To track how you are keeping up with your debt payments, Griffin encourages you to check your credit score and pull your credit report at AnnualCreditReport.com to see where you stand. Your credit report will list the payment history on your current and historical credit accounts from the past seven to 10 years, including revolving (credit cards) and installment accounts (mortgages and loans).

Here's what to look for when you review your credit report.

Consider signing up for a credit monitoring service that can help you keep an eye on your credit and alert you in real time of any updates or changes. CNBC Select reviewed and rated the best credit monitoring services, and if you don't want to pay for a service, consider one of the free ones that made the list: CreditWise® from Capital One and Experian free credit monitoring.

CreditWise® from Capital One

Information about CreditWise has been collected independently by CNBC and has not been reviewed or provided by the company prior to publication.
  • Cost

    Free

  • Credit bureaus monitored

    TransUnion and Experian

  • Credit scoring model used

    VantageScore

  • Dark web scan

    Yes

  • Identity insurance

    No

Terms apply.

Experian Dark Web Scan + Credit Monitoring

On Experian's secure site
  • Cost

    Free

  • Credit bureaus monitored

    Experian

  • Credit scoring model used

    FICO®

  • Dark web scan

    Yes, one-time only

  • Identity insurance

    No

Terms apply.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.