Millennial credit scores vary significantly from one city to the next, and a deeper dive into the FICO scores shows surprising results in some cities.
The average Millennial borrower credit score on closed mortgage loans ranged from 662 in Madisonville, Kentucky, to 757 in San Francisco, according to the latest Millennial tracker released by Ellie Mae.
In some cities, the results were not surprising as loan amounts are usually higher in larger coastal metropolitan areas, and therefore require higher credit scores. For this reason, scores such as San Francisco’s 757, Los Angeles’ 745, Boston’s 701 and Miami’s 722 came as no big shock.
What was surprising, however, were some rural areas, such as Mitchell, South Dakota, where Millennial FICO scores actually surpassed that of both Boston and Miami at 735. And while experts at Ellie Mae were surprised by the higher scores, they soon learned why.
“Our Borrower Insights Survey recently found that many Millennials have a strong misperception about needing a perfect credit score to qualify for a home loan,” said Joe Tyrrell, Ellie Mae vice president of corporate strategy.
Overall, the national average FICO score held steady in May for all closed loans for the third consecutive month at 721. This represents the lowest average for Millennial borrowers since April 2017.
This is down slightly from the average FICO score for all borrowers who closed loans in May, which was 724, according to the latest Origination Insight Report.
The Millennial Tracker also found purchases made up 90% of all closed loans, up from 89% in April, while refinances decreased from 10% to 9% in May. Conventional loans made up the majority of mortgages for Millennials at 68% of total closed loans. This is compared with 28% of closed loans for FHA and just 2% of VA. The remaining 3% were undisclosed.
Millennial males were listed as the primary borrower on 62% of closed loans, and females were listed on 32% of loans. Another 7% remained unspecified. The average home-buying age of Millennials in May came in at 29.9.