Why Do Women Have Lower Credit Scores Than Men?

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Credit scores are impersonal. Credit bureaus want to know how much you owe, how much total credit you have available, how often you pay your bills on time, and other information about your finances. A credit bureau doesn’t care whether you’re a man or a woman.

What the numbers say

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The numbers don’t lie. A gender report from Credit Sesame data shows that as a group, men have better credit scores than women. Among our members, the average credit score for men is 630, compared to 621 for women.

And yet men actually owe more than women — the average man in our database owes a total of $25,225, while the average woman owes just $21,171. How can men owe more and still have better credit scores?

Income disparity

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Income likely has a lot to do with it, says Linda Sherry, a spokesperson for Consumer Action, a nonprofit consumer advocacy and education organization. “We know that men have higher salaries than women, on average, for the same positions. Those men may have more wherewithal to take out more credit,” Sherry says.

Indeed, our data shows that men have lower debt-to-income ratios than women, which means that, while their debt is higher, their incomes are higher, too. Among our members, 23% of men report that they earn more than $75,000 a year. Only 18% of women say the same.

Is the cost of living really higher for women?

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Women also often have to pay more for similar products, says Melinda Opperman, a certified credit counselor and the senior vice president for community outreach and industry relations at Springboard Nonprofit Consumer Credit Management, Inc. “Many products that are marketed ‘just for women’ are no different than products for men, but cost more,” Opperman says.

The cost of living can be higher for women than it is for men in many ways, she says. “Women’s clothing is more likely to need dry cleaning than men’s, hair stylists for women are more expensive than barbers, and studies show doctors order more tests for women than men with the same symptoms,” she says. “All of these kinds of things add up, and leave women with less money to pay the credit card bills than their male counterparts,” she says.

Women are using more of their credit

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Women also tend to use more of the credit that’s available to them than men — 59% of our female members use more than 70% of their available credit, compared to 57% of men. Meanwhile, 28% of men use less than 30% of their total credit, and only 25% of women are in this enviable position.

Credit utilization — how much your credit card balances are compared to your credit limits — is an important factor in your credit score. So the fact that men use less of their available credit is one reason for their higher credit scores. Indeed, this could be a cycle.

A person with a higher credit score is more likely to get a higher credit limit. Assuming debt stays the same, the higher credit limit results in a lower utilization ratio, and thus a higher score.

Women have more problems with debt, but are more likely to enter debt management

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Women are also more likely than men to have serious trouble managing their debt. A solid 57% of men have no accounts in collections, while only 53% of women are free of this serious stain on their credit histories. Women are more likely than men to end up in a situation where their debt seems to have truly spiraled out of control. About 18% of women have five or more accounts in collections, compared to only 14% of men.

Credit counseling organizations say that women are more likely to seek help managing their debts than men. (You may also want to read What It’s Really Like to Enter a Debt Management Program.)

According to the National Foundation for Credit Counseling, in 2014, 63% of credit counseling clients were women, while 37% were men. Springboard’s Opperman says she’s noticed the same pattern. “The good news is that women do seem more willing to seek help if they need it,” she says, “but we were always concerned about the implication that women had more credit-related difficulties than men.”

Older women still have lower scores than men

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For both men and women, credit scores tend to improve with age. Still, in all age groups, men’s scores are better than women’s — and their advantage grows as they get older.

According to our Credit Sesame data, men ages 35 to 44 have an average credit score of 623, while women in this age group have an average score of 614.

By ages 55 to 64, men have pulled further ahead, with an average score of 661, compared to women’s average score of 651. And men ages 65 and up are doing even better compared to their female peers: men in this group have an average score of 705, while women over 65 have an average score of 690. Here is a deeper look behind why the credit score gap is so much wider at this age.

Men have steadily worked throughout their careers

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The income gap could partly explain this trend, too. If men start out making more, their advantage will only grow over the course of their careers as they get raises on a higher base salary. It’s also still the case that women are more likely than men to take time away from work to take care of their families.

That means men are more likely to have been working steadily throughout their careers, earning promotions and raises as they go, while women are more likely to have taken a few years off, worked part-time for a period, or deferred promotions to care for their kids or aging parents.

Men may have the advantage over women when it comes to credit, but “the credit scoring system is designed as best as it can be to be gender neutral,” says Bruce McClary, a spokesperson for the National Foundation for Credit Counseling.

And no matter who you are, “the single most important factor in a credit score is payment history,” whether or not you pay your bills on time and in full, McClary says. “So it may be the source of your problem, but it can also be the source of your solution,” he says.

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Published February 18, 2016 Updated: April 19, 2016
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Stephanie•  August 30, 2016
One thing you missed in factoring why women's debt to income ratio may be higher is that there are a lot of single mothers out there with higher expenses than men who are not raising children alone. But please explain why a woman's credit score is lower when all income and debt factors are equal?
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Stephanie•  August 30, 2016
Also, FICO says it does not include income and gender in their scoring.
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