Just over 2 in 5 young women say their credit score does them a disservice, and about half say they have negative feelings about their current level of credit.
A significant number of young women (ages 18-39) say their credit score elicits feelings of shame, worry and anger, according to Credit Sesame’s latest report on a survey of 5,000 US adults around of their credit score.
In fact, almost a third of these women had an overall bad experience with credit. This is almost double that of Americans overall (18%), which seems to indicate that there is a gender credit gap.
This is not surprising considering that there is also a gender pay gap in the United States. Last year, the median salary for men was around 19% higher than the median salary for women in the same situation, according to PayScale. Because women earn less than men, they’re more likely to have to rely on credit cards to make up the difference, says personal finance expert and Certified Financial Planner Bobbi Rebell. This, in turn, increases their use of credit and makes them less creditworthy.
But while credit scores can be daunting, Rebell says it’s critical that women don’t let them define who they are. “It’s important to remember that there are things you can control and things you can’t control when it comes to your credit score,” she says. For example, a big part of your credit score is how long you have credit. But there’s no going back if you started using credit later in life. It’s like that.
“What you can do is be proactive about the things you can control and really understand how the score is put together,” says Rebell, who hosts the Financial Grownup podcast.
Credit Sesame found that more than half of women, 55%, say they were never taught the best ways to handle credit and about a quarter would give themselves a failing grade on their understanding current credit ratings.
But Rebell says having all the information makes a huge difference. Many people, for example, believe that the most important thing to do is to pay all of your bills. “While this is very important, on-time payments are actually even more important. Never miss a payment,” says Rebell.
You can also try to improve your credit usage, which is the ratio of the amount of money you have on your credit cards to the total amount of credit you have. Ask your card issuer for a higher credit limit on your credit card. But the trick is not to use it, says Rebell. Having a higher limit and keeping your balance low will automatically improve your usage rate.
And even if your current score isn’t where you want it right now, it’s worth working to increase it. About twice as many women as men surveyed by Credit Sesame gave up on improving their credit, viewing it as a lost cause.
“Improving your credit can be frustrating and time-consuming, but the benefits of having a higher score are worth investing in,” says Rebell.
Bad credit scores can affect more than your ability to get a loan or mortgage. Recent reports from Credit Sesame found that Americans say low scores affect their housing, careers, mental health, relationships and even their ability to communicate.
For those looking to improve their score, Rebell says to start with an honest self-audit to find out why your credit is lower than you’d like, then put a plan in place to take specific steps to improve it.
“Focus on tangible things you can control, like paying every bill on time, even if you can only pay the minimum,” she says.
To verify: Black and Hispanic Americans often have lower credit scores — here’s why they’re hit harder
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