It is no secret that on average in America, women earn less than men. Specifically, in 2019 women are earning just under $0.80 on the dollar compared to men. Knowing this is the case, have you ever wondered if women have lower credit scores than men considering they have lower income and less money available to pay their bills?
In a recent study conducted by the Federal Reserve, using a group of 8,000 men and women, the study showed that men on average, just like salary, have higher credit scores than women. Similarly, single women compared to single men have lengthier credit histories and worse credit as they struggle to pay off their debt.
Why do women have lower credit scores?
While there is not one exact reason why women have lower credit scores, there is a number of factors that contribute to women’s lower scores. First, when calculating a credit score, five factors are considered. These factors include payment history, the number of times you apply for credit, length of your credit history and your credit utilization ratio or the amount of available credit compared to how much credit you have used. If women are making less money than men, then women have less money available to pay their bills. Also, lower credit scores mean less opportunity to earn favorable interest rates on credit cards, loans, etc.
How can women improve their credit score?
If women want to improve their score they need to take steps to ensure their credit is in the best shape possible. You can improve your credit by following a few simple steps. First, review your report and make sure it is accurate. Once a year you are entitled to a free copy of your report at AnnualCreditReport.com. Second, make sure your credit utilization ratio is as low as possible. Try paying down balances and making an effort to not allow your credit cards to reach their limit without paying them off. Lastly, build a good credit history. Make sure to pay bills in a timely and regular fashion. A good credit score means no late payments.
The credit industry is forbidden from discriminating against women and other minorities. When a lender looks to extend you credit, they do not care if you are male or female. All they care about is whether or not you pay your bills on time and in full, yet women still seem to fall short. If you would like more information and are in need of legal assistance, contact SmithMarco P.C. for a completely free case review.