Credit Score Battle of the Sexes

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Credit Scores: Men vs. Women

Credit Scores: Men vs. WomenAs I was browsing through my Facebook News Feed I came across this quote:

“A successful husband is one who makes more money than his wife can spend. A successful woman is one who can find such a man!”

It wasn’t the first stereotype I’ve heard characterizing women as frivolous spendthrifts. The question was: Is it true?

Naturally, being the curious sort about all things credit and personal finance I consulted the all-knowing, sum of all human credit knowledge –

(You thought I was going to say Google, right? Okay, I did a little research there too.)

My findings in the Credit Score Battle of the Sexes might force you to update your comedy act.

Quizzle’s Survey of Credit Demographics

In a survey conducted by Quizzle of more than 800,000 Americans, men averaged a credit score of 666 and women a slightly lower 648, revealing a very narrow gender gap.

[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]

The insignificance of this difference in credit scores led me to investigate a deeper question:

Where might this credit gap be trending for the future?

My first step was to look at Quizzle’s potential credit score tool.  This credit improvement tool analyzes the information on your credit report and highlights specific opportunities and potential to improve your credit. In this survey, Quizzle revealed that on average women have more opportunity for improvement, with 28 points of improvement, over men’s 23.

Discriminating by Gender is a No-No

Unfortunately, as I went looking for more data in hopes of declaring a clear winner in the Credit Score Battle of the Sexes, the data was sparse. In the United States, using gender as a discriminating factor in credit scoring or lending is a no-no, which means there is very little gender data collected or analyzed.

Therefore, my research turned to a rare study of credit scores in South Africa and digging into the behavioral factors that contribute to credit scores.

Women May Actually Have Higher Credit Scores

Interestingly enough, in a broader survey of credit scores conducted of all South African consumers, by the Credit Bureau Association (CBA):

  • Women have better credit scores,
  • Married men have better credit scores than single men,
  • Women have more credit accounts in good standing, and
  • Women with bad credit are more focused on fixing it.

As you will see, considering how the average woman manages financial matters relative to how credit scores are calculated, a trend toward superior credit scores in not surprising.

Women are More Concerned About Debt and Paying It

Several recent surveys demonstrate that women are much more focused on paying off debt. Since this accounts for 35 percent of your credit score, it’s logical to expect women’s credit scores to naturally trend higher.

In a recent Javelin Strategy & Research survey, 3,000 men and women were asked about their 2011 financial strategies. The results found women far more focused on paying off outstanding credit card debt and loan balances, as compared to men. A Citigroup survey backs up this statistic with their findings that 36 percent of women are uncomfortable with their current debt versus only 30 percent of men.

Women are Careful with Sensitive Financial Data

Protecting your credit report from identity theft is increasingly important. Your credit report is often the first indicator of an identity theft, from credit card misuse to wire transfer fraud – the two highest identity scams (source: 2010 FTC fraud reporting).

Women show the most diligence in keeping their financial data and thereby their credit safe. In a study conducted by and GfK Roper, 83 percent of women were more likely to destroy sensitive information in contrast to only 69 percent of men.

Women Increasingly Have More Money to Manage

However, the biggest potential pendulum swing in closing the credit gender gap is income. The average difference in salary between men and women is often cited as a fundamental credit disadvantage.

But, that gap is also rapidly narrowing.

  • Women have surpassed men in college enrollment by 500,000 (Kiplinger).
  • Women’s unemployment is nearly 3 percent less than men (Bureau of Labor Statistcs).
  • Women’s representation in the labor market has risen to 61 percent (Kiplinger).
  • Women’s representation in management positions has risen to 32 percent (Kiplinger).

All of these factors are working together to narrow the salary gap and giving women more money and credit to manage.

Who is the Best at Managing Credit?

Getting down to the brass tacks of credit management – paying off debt, preventing identity theft, and having supporting income – women soon become clearly a better credit risk.

Oh, and if you’re married your wife might be the best bet for improving the household’s overall credit rating.

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