Generation Z Saw Greatest Debt Increase in the Past Year

Though much of what's written about younger generations and debt focuses on millennials, members of Generation Z—the youngest generation of adults—seem to have a growing appetite for borrowing. In the past year, Gen Z saw their debt balances grow more quickly than any other generation.

Overall, this generation's total average debt increased by 24% from the second quarter (Q2) of 2018 to Q2 2019. And while their total debt still pales in comparison by dollar amount to other generations, it shows that the generation has kickstarted their borrowing.

As part of our ongoing look at debt in the U.S., Experian analyzed consumer credit data from 2018 and 2019 to find out more about Generation Z and the group's debt levels. Read on for our insights and analysis.

Generation Z Saw Fastest Debt Growth Year Over Year

Since Q2 2018, members of Gen Z have seen their total average balances jump 24%—growing from $7,729 to $9,593 in 2019, according to Experian data. That's double the rate of growth millennials saw during the same time period and the highest rate of growth seen by any generation.

As Generation Z includes 18-year-olds that are just becoming eligible for credit, this growth may reflect the excitement the young consumers have for entering the credit market as new adults.

Total Average Debt Change by Generation
Generation Z$7,729$9,593+24%
Generation X$132,943$135,841+2.2%
Baby Boomers$98,911$96,984-1.9%
Silent Generation$41,828$40,925-2.2%

Source: Experian data from Q2 of 2018 and 2019

Gen Z Balances Lowest in all Debt Categories Except Mortgages

While members of the generation saw a steep overall debt increase, they still maintain the lowest balances overall and for almost every type of debt, with mortgages being the only exception. Members of Gen Z held the second-lowest average mortgage balance of any age group; only the silent generation had a lower average balance.

Members of Gen Z carried $142,600 in average mortgage debt in Q2 2019—that's compared with the $132,025 held by consumers in the silent generation. Across all other debts, members of Gen Z held the lowest average balances.

Gen Z Consumers Have Lowest Debt in Expensive, High Debt States

Counter to expectations, members of Gen Z living in states with a high cost of living and high average debt actually carried the lowest debt balances on average. Washington, D.C.—which has a cost of living second only to Hawaii—ranked lowest in terms of Gen Z debt balances, with an average of only $7,276 in Q2 2019. California and New York—the third- and fourth-costliest states to call home—ranked among the top five states with the lowest overall debt for members of Gen Z.

States With Lowest Gen Z Total Average Debt Balances
StateFICO® Score* Cost of Living RankTotal Debt
District of Columbia65751$7,276
New York67749$7,745
Rhode Island67642$8,549
Source: Experian data from Q2 2019. Cost of living rankings are from the Missouri Economic Research and Information Center; higher numbers indicate higher cost of living.

Nearly Two-Thirds of All Gen Z Are Now Considered Scoreable

A common issue among younger consumers is not having enough data in their credit file for scoring models to populate a credit score. These "unscoreaeble" consumers typically will have a harder time applying for credit and are urged to jumpstart their credit scores with a secured credit card or by getting added as an authorized user to someone else's credit card.

Since Q2 2016 (the earliest date with reliable Gen Z consumer data), members of the generation have made great strides toward being scoreable, with nearly two-thirds of them having credit scores in Q2 2019. In 2019, 72% of Generation Z was considered scoreable, a 16 percentage point improvement from the 56% that were scorable in 2016.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.