4 Financial Lessons You Can Learn From 2017's Credit StatisticsRecently, credit bureau Experian released an analysis on the state of credit in 2017, looking at how statistics, such as average credit scores and total debt, have changed in the last year. The article includes several interesting trends concerning how people are using credit, as well as some predictions for how things will continue to develop. We’ve analyzed these credit statistics, and we’ve come up with four pieces of advice for how the average American can improve their finances. Read on to see how your credit measures up with the nation’s, as well as what you can do to make it even better.

2017’s credit statistics

2017 saw Americans gain both higher average credit scores and more total debt. The average VantageScore (a credit scoring model that competes with FICO) was 675, up from 673 in 2016, and for the first time in history, there are more Americans with very high credit scores — above 780 — than very low credit scores — below 600. Unsurprisingly, average credit scores seem to increase as people get older, with the Silent Generation (those born before 1946) having average scores nearly 100 points higher than the most recent generation, Generation Z. Additionally, people are borrowing more, with total debt for credit cards, auto loans and student loans all hitting record highs of over $1 trillion each. The most growth in credit card debt came from millennials, whose total debt rose over 10%, compared to the national average of 2.7%.

Credit utilization ratio, which determines a sizable portion of your credit scores, didn’t change much at all, staying at around 30% on average. Interestingly, Experian advises keeping your credit utilization ratio below 30%, meaning many Americans are keeping a credit balance just at the edge of what’s sensible. More concerning, though, is that the number of debt delinquencies where payments are late by 90 days or more is up to 7.47% for credit cards, compared to 7.08% in 2016, and it’s even higher for student and auto loans. This is partly because the biggest growth in new credit accounts and loans has been for subprime accounts, which are given to borrowers with lower credit scores and have higher interest rates.

On a lighter note, Experian included credit statistics comparing scores and credit card debt by state, and it seems like region and climate play a small part in determining how your credit fares. The places with the highest average credit scores, such as Minnesota (709), Vermont (702) and South Dakota (700), all have cold weather. In terms of average debt, states on the Eastern seaboard tend to carry the most, with Connecticut ($7,258), Virginia ($7,161) and New Jersey ($7,151) all appearing in the top five. The one exception to this is Alaska, which has by far the highest average credit card debt of any state at $8,515 per person. This may be due to the high cost of living in Alaska, or possibly Alaska’s high unemployment rate.

Advice for 2018

Looking at these statistics, there are four things people can do to beat the trends and improve both their credit scores and finances.

Reduce credit utilization ratio

While the national average for credit utilization ratio isn’t abysmal, there is definitely room for improvement. Lowering your credit utilization ratio will boost your credit scores and, if you do it by paying off debt instead of just increasing your credit limit, reduce your interest payments. You don’t have to carry a balance on your credit cards to enjoy all of the rewards and security features they have to offer.

Improve credit scores before taking out a loan

If your credit scores are low, the loans you’re going to get approved for will probably have high interest rates and less-than-favorable monthly payments. This is especially true for auto loans, which are extending repayment terms to unprecedented lengths in order to accommodate borrowers with lower credit scores. By focusing on improving your credit scores before you take out a loan, you can get access to better interest rates, which will reduce your monthly payments. Even if you already have a loan with a high interest rate, better credit scores could help you refinance that loan with a lower rate. You may also want to consider borrowing from a personal loan service, as some of them judge your creditworthiness using alternative criteria that may be more favorable to you, such as your work history or academic record.

Borrow carefully

According to these credit statistics, younger generations, particularly millennials, are acquiring debt at a much faster rate than the national average. If you are one of these younger people (or your child is in this age group), watch out to make sure that your borrowing doesn’t outpace your income, or else you may find yourself stuck in a debt cycle which is difficult to escape. Creating a budget can help you control your spending, especially as your wages increase with more work experience and you gain new expenses, like insurance payments and mortgages.

Learn about debt collection

Debt delinquencies are increasing, which also means more debt going into collections. If you have an unpaid debt that’s over 90 days old, you may start hearing from debt collection agencies, and not all of them play by the rules. Learn the rights afforded to you by the Fair Debt Collection Practices Act when dealing with collectors, and ask agencies to verify the debt they’re collecting before you pay them anything.

By looking at credit statistics, you can see the mistakes everyone else is making so you can see where you can improve yourself. To find more financial tips, follow our personal finance blog.