Credit scores of millennial homebuyers are varying significantly across the U.S., according to the latest Ellie Mae Millennial Tracker released on Wednesday. The tracker found that the credit score of young American borrowers on closed loan varied greatly from city-to-city in May, ranging from 662 in Madisonville, Kentucky to 757 in San Francisco, California.
The report said that while the city-specific scores of millennials were not representative of a state's population, it had found that the average scores in the largest metropolitan coastal cities were quite high. The report found that credit scores for this group of homebuyers was 745 in Los Angeles, 701 in Boston, and 722 in Miami. "However there are some surprisingly high numbers in more rural areas such as Mitchell, South Dakota where the average FICO for millennials was 735 in May, higher than Boston or Miami," said Joe Tyrell, EVP of Corporate Strategy at Ellie Mae.
Apart from Madisonville, Mount Pleasant, Texas also saw a lower than average credit score for millennials at 689. Indiana, Pennsylvania saw millennials hitting an average credit score of 733, while those in Gloversville, New York had a credit score of 701.
One of the reasons for millennial credit scores varying so much could rise from the perception of needing a perfect credit score to buy a home. "Our Borrower Insight Survey recently found that many millennials have a strong misperception about needing a perfect credit score to qualify for a home loan," Tyrell said.
Overall, the report found that the average FICO score for all closed loans to millennials held steady in May for the third straight month at 721. This is the lowest average recorded for millennial borrowers since April 2017, according to Ellie Mae.
In fact, the average credit score for millennials is lower than that of borrowers of all age-groups who closed their loans in May. According to the Ellie Mae originations insight report borrowers across age-groups who closed loans in May had an average credit score of 724.
Additionally, the report found that purchase loans made up 90 percent of all closed loans to millennials, up one percentage point from 89 percent in April. Refinance loans represented 9 percent, down one percentage point from 10 percent in April.