Higher amounts of debit don’t always equate to a lower credit score, as a new study focusing on Millennial renters demonstrates.
A new analysis from CoreLogic found that renters with student loan debt have higher average credit scores than those without. Moreover, those with higher debt loads carry higher average credit scores than those with lower student-loan debt amounts.
The findings are somewhat surprising but not if you consider that college graduates on average earn more income than their non-college-graduate counterparts.
CoreLogic studied the effect of student-loan debt on millennial renters, those 20-34 years old, by using the CoreLogic Rental Property Solutions’ tenant screenings formula from ScorePLUS. Using a rental applicant’s credit history from the three credit bureaus, along with detailed “rental application characteristics,” ScorePLUS measures the likelihood of a renter defaulting over the first 12 to 18 months of renting.
Like other credit scoring models, this score is scaled in the range of 200-800, with a higher score indicating better credit quality.
“We can see in both 2010 and 2015 that millennial applicants who had higher student loan debt earned higher average ScorePLUS scores than those who had a lower amount of student loan debt,” writes Jianjun Xie in a CoreLogic blog post. A similar trend was found in renters’ FICO scores, CoreLogic added.