People in their 20s and 30s who live in households that have a mortgage, or have borrowed money to buy a home, are less likely to have their credit scores improved over the past year, according to a new analysis by Credit Karma.
The report, which was released Thursday, found that consumers who had a mortgage in 2016 are nearly twice as likely as those who don’t to have a good credit score.
It found that for people in their 30s and 40s, the percentage of consumers with a good score fell by a similar amount, from 32% in 2016 to 26% in 2017.
For older consumers, the decrease in good score was larger, from 35% in 2015 to 27% in 2018.
But it is the decline in good scores for people aged 65-plus, which is at a higher rate than for those in their early 20s, that stands out, Credit Karma CEO David Kestner said.
“That’s the category that’s really, really impacted,” KestNER said.
“They’re probably the people who’re going to be most impacted by the defaults, but they’re also the ones who are probably the least likely to get the loan modifications.”
The report’s authors said the reason why millennials were less likely than older consumers to get loan modifications was that they were more likely to be in a lower income bracket and to be employed.
They also said the changes in consumer sentiment toward mortgages are particularly important because they may help explain why Americans are delaying taking out their mortgages, even as the mortgage market remains very strong.
“It’s a really good sign that we’re getting people to delay getting a mortgage and it’s also really telling us that our economy is resilient,” said Jonathan Schwartz, chief executive officer of credit consulting firm Credit Karma and a co-author of the report.
Schwartz noted that while it’s common for consumers to have negative credit scores, the numbers in the Credit Karma study show that millennials are more likely than their parents to have high debt.
According to Credit Karma, about 22% of millennials had credit scores of 660 or above, compared with 22% for their parents.
The report found that the majority of consumers who were at risk of defaulted on their mortgages in 2017 had credit ratings that were below 660.
That means their credit history was in the lower half of consumers.
The researchers said the numbers should not be interpreted as a cause for concern for borrowers.