Income disparities between men and women are a well-known issue that has been extensively studied. However, what about differences in lending and credit scores based on gender? This topic is complex due to regulations like the Equal Credit Opportunity Act (ECOA) of 1974, which prohibits discrimination by lenders on various demographic factors, including gender.
Despite challenges in obtaining specific data, a 2020 report from Experian sheds light on credit scores and usage patterns by gender. Titled “Women and Credit 2020: How History Shaped Today’s Credit Landscape,” this comprehensive analysis offers valuable insights into the evolving credit dynamics between men and women as we entered the third decade of the 21st century.
The Equal Credit Opportunity Act of 1974
In the not-so-distant past, women faced obstacles in accessing credit, such as requiring male cosigners and larger down payments, especially evident in home purchases. The ECOA was a crucial step towards eradicating such gender discrimination in credit access.
Even today, disparities persist, with women encountering challenges in securing mortgages due to the lingering gender-based wage gap. In 2023, women earned approximately 83.7 cents for every dollar earned by men.
Credit and Debt for Women vs. Men
According to the Experian report, credit availability and usage have significantly aligned for both genders by 2020. While men carried more debt across most categories, women held more student loan debt and tended to have a higher number of credit cards.
Despite differences in debt accumulation patterns, such as men having higher overall debt balances and more personal loan debt, women showcased a slightly higher amount of student loan debt and credit card holdings.
Are the Average Credit Scores for Men and Women Different?
In recent years, average credit scores for men and women have maintained a close proximity, with modern credit scoring models no longer considering gender, thanks in part to the ECOA regulations.
Men generally carried more debt than women in various categories according to the Experian report. However, women held marginally more student loan debt and tended to possess a higher number of credit cards.
The Bottom Line
Legislative changes in 1974, including the ECOA, paved the way for greater credit access for women, leading to a narrowing gap in credit and debt metrics between genders. As of 2020, women have achieved debt and credit equality with men, evidenced by their comparable average credit scores.
While disparities in debt composition persist, such as men holding more housing-related debts, women taking on more student loan debts, the uniform credit scores suggest responsible credit management across genders.