Why Men Have Better Credit Scores Than Women

Man holding credit card for online shopping
Source: iStock

Men have won another battle in the gender wars. On average, guys have higher credit scores than women, according to personal finance website Credit Sesame. The average score for men was 630 compared to 621 for women, even though men tended to have more debt overall: $25,225 vs. $21,171.

The reason for men’s slightly higher scores isn’t necessarily because they’re smarter about financial matters, though. Men tend to earn more than women, which can make it easier to manage credit and achieve a higher credit score, according to the report, which was based on an analysis of data from 3.5 million Credit Sesame users.

Twenty-three percent of men in the Credit Sesame sample earned more than $75,000 a year, compared to 18% of women. Nationwide, women who work full-time earn 78 cents for every $1 a full-time male worker takes home.

credit scores by gender
Source: Credit Sesame

The gender pay gap is a well-known problem, but the experts at Credit Sesame who put together the data were still surprised by its apparent effect on credit scores.

“We were surprised to find that men still maintain the advantage for securing credit – in every age bracket and nearly every U.S. market,” Adrian Nazari, founder and CEO of Credit Sesame, said.

Credit scoring agencies like Experian, Equifax, and TransUnion don’t consider income when assigning someone a credit score. But how much you earn does effect the number in a less direct way. When you apply for a loan or a credit card, the issuer will look both at your credit score and at other factors – like your income – to determine how much credit to extend to you. Unsurprisingly, people with bigger incomes tend to qualify for larger lines of credit.

credit report
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Credit scoring agencies, in turn, consider the percentage of your total available credit you’re using as one factor in determining your overall score. Women, who earn less than men on average, also have lower credit limits and tend to use a slightly higher percentage of their available credit. Take credit cards specifically. Even though men carry bigger balances than women (an average of $3,854 vs. $3,624) they use less of the total credit available to them, which helps bump up their average score.

Women are also somewhat more likely than men to have bad debt. Eighteen percent of women had more than five accounts in collections, compared to 14% of men, and not paying your bills is a sure way to drag down your credit score.

Average credit scores for both men and women tended to rise with age, yet women’s scores consistently trailed men’s by roughly 10 points. Scores also trended up as debt levels (and presumably incomes) rose, yet the gap between genders persisted.

A select group of women did have higher scores than men – those who lived in the same towns as the lowest-scoring men. Men in Hazel Crest, Illinois, had an average credit score of 579, the lowest in the country, while women in the same town had an average score of 599. In five more of the 10 cities where men had the lowest scores, women’s average scores were higher.

couple talking to financial advisor
Source: iStock

Earning less than men might be dragging down women’s credit scores, but they’re beating men in other financial areas. In 2015, women lost an average of 1.4% on their investments, compared to losses of 1.8% for male investors, according to online investment firm Sigfig. Those performance numbers aren’t an anomaly, either. Researchers have known for years that men tend to be worse investors than men. One possible reason for guys’ subpar performance? They trade more frequently than women, which drags their returns down by roughly 2.65% a year, compared to 1.72% for women, a 2001 study found.

Gender differences aside, the Credit Sesame survey results suggests everyone could be doing a better job of managing their credit. More than 40% of men and women have at least one delinquent account, and both groups averaged more than $3,500 in credit card debt. It seems everyone could do a better job of paying bills on time, using less of their available credit, and not running up balances on their credit cards, all moves which can boost your credit score, regardless of income.

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