Why Do Women Typically Have Lower Credit Scores Than Men?

February 21, 2016  |  

Source: Corbis

Source: Corbis

The wage gap between women and men is nothing new, but one recent study is making headlines as this consequence of disparity also affects credit scores.

According to a report from CreditSesame.com, women have lower average credit scores (621) than men (630). Although women generally have less debt than men, their analysis of 2.5 million Credit Sesame users tallied that men’s scores are boosted typically because their paycheck earnings are higher.

The Frisky also points out that overall it’s a domino effect: “Women’s income tends to be lower than men’s, which means that their debt-to-income ratio is higher than men’s (18 percent for women to 17 percent for men), both of which factors influence women’s credit limits, which also tend to be lower, which then means that women are using more of their credit limits than men are.”

The analysis also highlights that men carry more credit card debt than women (average balance of $3,854), but because their credit limits are higher, they actually are using less of their available credit.  But because their credit limits are higher, they are using less of their available credit.

In contrast, women are more likely to have nearly five or more collection accounts than men. This can causes a drastic drop in a consumer’s credit score.

While the report also says that credit discrepancy increases with age, there are still a number of other personal factors that can influence your credit score. Nevertheless, this shows just how the pay gap can have long-lasting effects on a woman’s financial health. Estimates from the Institute for Women’s Policy Research say women may not see equal pay until 2059.

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  • Lisa

    The wage gap is not the problem, it’s that women, and most people in general, need to ease up on the credit card usage.

    • Annamuffin

      And pay their bills on time, late payments ding your score and I’m pretty sure that’s why there scores are so low….

  • Mrs.J

    Women love to shop and spend so much money on trying to look good.Nice clothes,nails done,hair done,Botox and gym memberships ect keep women in more debt in my opinion.

  • ________

    But black women are more likely to be homeowners than black men…..

    • N0PE

      With no man in the house to cut the grass.

  • Annamuffin

    Well when I was little girl probably like 5 my neighbor offered my a gig to water their grass and they would pay me 20.00….. Anyway once I started making money my mom opened me a bank account and taught me finacial literacy…. Credit these days has become a supplemented income, but when you can’t afford it you can’t afford it…. Also people need to remember to pay themselves first out of their check and don’t spend it, the key is saving…. The main reason men are better savers is because, a good man knows his role is the provider and to be eligible he needs to have good credit and savings, to provide for himself, wife and kids…. Most women aren’t taught that and they will still be in debt if you gave them a raise, because they don’t know how to save….

    • IanMC

      Are you advocating against equal pay for women ?

      • Annamuffin

        Im just saying from what I’ve seen and heard is women that work at ship yards don’t do nearly as much work just as women that work at paramedic jobs….. Basically jobs that demand heavy lifting and so on should not pay women more to stand around and look pretty…. I know that view isn’t popular but it’s true, I feel those issues need to be taken into consideration… Now if it’s a job and you and the fellow men are doing the same work yes you should be equally paid, but if that man is doing extra work such as heavy lifting, reaching and more work no you should not be paid the same….

        • Raze

          I’m sorry, but how many female paramedics do you know a and around looking pretty?
          Most of the individuaones I have seen work just as hard as their male counterparts. Paramedics also do heavy lifting. Just because someone is lifting while you complete other work doesn’t mean that that you should be paid less simply because all you don’t (or can’t) do is lift.
          Also, according to the article, women have less debt, so your assumption that they’re not taught financial literacy ridiculous at best.

          • Annamuffin

            Well it’s fact men do more heavy lifting at the workplace so stop pretending like you don’t know…

            • Raze

              Maybe if YOUR workplace, but where I’m at, most of them rarely do any lifting. Bending? Maybe. Lifting? It’s just as much as any woman out there.

          • Annamuffin

            I have a credit card and my limt is very high and my credit score is high as we’ll… Anybody with good credit knows if you pay your bills and have money in the bank your limt goes up… You only would have a low score if say you went into collections or didn’t pay your bills on time…. If you had finacial literacy you would know that and you would have high limit with a higher credit score… I highly doubt it has anything to do with gender, and is more about how you manage your funds… Because if these women were so debt free and paid their bills on time their credit score wouldn’t be that low…. That’s facts….

    • Lisa

      Voice of reason…

  • Joy

    Look up on the Gender Wage Gap (wage discrimination) (including for Black women, non-Black POC women, women on maternity leave). in other words, Men got the harder better jobs instead of women and the women who we’re denied them which they we’re also qualified for.

    Also when making a car purchase guess who gets the better deals?

    Who pays more in mortgage and more for mechanics?

    This is not hard to figure out.

    • N0PE

      The gender wage gap is essentially a myth, or at the very least exaggerated. Look up Claudia Goldin who’s an economics professor at Harvard. Statistically, women are much, much less likely to negotiate pay or request raises or even apply for positions unless they feel very qualified for it. Most women also tend to shy away from certain fields (typically the relatively more hazardous or “dirtier” ones), which oftentimes pay more. Each of those significantly impact pay, let alone all of them combined.