Home LoansMortgage

LendingTree finds financial profiles of millennials differ between homeowners and renters

selling a house with a reverse mortgage

Millennials are already the largest group of homebuyers in the housing market. And with 28-year-olds as the single largest age group in the U.S., millennials are set to dominate the housing market for years to come.

However, there are challenges to homeownership that millennials face, including the well-documented burden of student loans and a lack of affordable homes available to buy. No matter the financial situation, though, the first step to homeownership is a strong credit profile.

With that in mind, we thought it would be interesting to look at how the credit profiles of millennials who own homes compare to those who do not. We analyzed the credit records of over 1 million millennial users of the MyLendingTree platform to find out.

Key findings

  • Millennial homeowners have stronger credit profiles than renters, with a median credit score of 671 compared to 582 for non homeowners. This is not surprising, as higher scores make homeownership more accessible. On-time mortgage payments also boost credit scores from about a year after the home purchase.
  • Homeowners have a median of 9 accounts, compared to just 4 for non homeowners. This reflects the higher credit scores of homeowning millennials, as they are able to obtain more credit accounts. Many renters may face difficulty accessing credit due to their lower credit scores.
  • Just 64% of renters have a credit card balance, compared to 92% of homeowners. Homeowners tend to borrow more even in non-mortgage categories; they have a median balance of $6,633 in credit card balances, compared to $2,218 for renters.
  • Renters’ median utilization of their available credit is 58%, almost double the 31% for homeowners.
  • Homeowners are more likely to have an auto loan. 72% of homeowners have one and owe a median of $20,422, compared to $14,953 for the 50% of renters with an auto loan.
  • Student debt between the two groups is quite comparable. Homeowners owe a median of $22,647, with renters only slightly lower at $20,966 at the median; in both groups, 37% of millenials have a student loan.
  • 39% of homeowners have personal loans, with a median of $9,627. This compares to 26% for renters, who owe a median of $3,592.
  • Renters have more trouble servicing their debt, with an average of 8 negative marks on their credit profiles to just 3 for homeowners. 87% of renters have at least one late payment compared to 55% of homeowners.
  • Renters were late on 4.6% of all payments over four years, with homeowners late on just 1.5% of payments.
  • Renters also search for new credit more often. They have an average of 2.2 inquiries over the past 6 months compared to 1.7 for homeowners.

What should consumers know?

The largest drivers of the difference in average scores between homeowners and renters are late payments, where renters perform poorly, and credit utilization, which is higher for renters. Homeowners carry far larger balances, in part reflecting their better access to credit.

Whether you are a homeowner or a renter, there are steps you can take to improve your credit. If you are a renter who aspires towards homeownership, work on avoiding late payments and reduce the utilization of your credit cards. For homeowners, increasing your credit score could give you an opportunity to refinance your mortgage to a lower rate. For both renters and homeowners, the best way to manage your credit is to avoid getting overextended, which helps to avoid late payments.

Methodology

We analysed the credit records of over 1 million millennial users of the My LendingTree platform. My LendingTree is your smart money sidekick, analyzing your financial health to identify savings opportunities and serving up advice to help you improve your credit. Better loans and better credit gives you the confidence to do more in life.

This article contains links to StudentLoanHero, an affiliate of LendingTree.

 


Featured Articles

What Is a Construction Loan and How Does It Work?

Maybe you’ve found the perfect plot of land, nestled in the mountains with a creek that rolls around the outer edges of the property. After months of research, you have …

Read More »

5 Trends to Watch in the Spring 2019 Homebuying Season

If you’re still waking up to freezing temperatures, it may not feel like winter is in the rearview. But as far as the calendar is concerned, spring is here, and …

Read More »

What Are Discount Points?

What Are Discount Points?

February 21, 2019

You’ve spent years saving up for your dream home, and it looks as if it may finally be time to buy.  But mortgage interest rates have been edging up lately, …

Read More »

What is Home Point Financial? Home Point Financial was founded in 2015 and is headquartered in Ann Arbor, Mich. The company has grown substantially since it was founded. Total loan …

Read More »

What Are Non-Qualifying Mortgages?

As you get started on your path to own a home, you might be overwhelmed or confused by the wealth of mortgage options available to borrowers. If you’ve been denied …

Read More »

 

Compare Mortgage Loan Offers