What Is The Average Credit Score In The Us

What Is Considered An Average Credit Score

The words fair and average are sometimes taken to mean the same thing. But in credit-scoring terms, fair and average are very different. Based on the numbers shown above, the average American has what would be termed good credit, which ranges from 670 to 739 in the FICO score model and 661 to 780 in the VantageScore model. This is better than fair credit, which checks in at 580 to 669 for FICO and 601 to 660 for VantageScore.

So, fair and average are really two different measures in credit scoring, even though both have numerical functions. Average in this instance is a mathematical term, also known as arithmetic mean. In other words: add up all individual credit scores and then divide the sum by the total number of those individuals.

The word fair, as outlined in the ranges above, is actually the next-to-the-last category above poor. The difference in credit scoring between fair and good is actually pretty substantial in terms of what one score will cost you to get a loan or to access credit versus the other.

Is 718 A Good Credit Score

A 718 FICO® Score is Good, but by raising your score into the Very Good range, you could qualify for lower interest rates and better borrowing terms. A great way to get started is to get your free credit report from Experian and check your credit score to find out the specific factors that impact your score the most.

How To Improve Your Credit Score

They are ways you can improve your score if its an average score or lower. Below are the procedures:

• Ensure you pay your minimum and debts on time as late payment can reduce your credit scores which will last for about seven years on your credit report.
• Maintain your credit card balance on a low level. The credit utilization rate is extremely vital in adding up or reducing your credit score. It applies in comparison of your current balance and credit limit of your credit card. It is important you have a low credit utilization rate to help boost your credit score.
• Have your credit accounts, added to your credit report. They ought to be installment accounts, such as student, auto, home or personal loans, or revolving accounts, such as credit cards and lines of credit.
• It us important that you apply for credit when it is needed by you. Applying for a new account could reduce your score as it will lead to hard inquiry. Furthermore applying for a high number of loans and credit cards at a short period of time would greatly reduce your credit score.

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The Average Credit Score For A Home Loan

If youre getting ready to buy a home, consider that the average credit score of those who buy homes in the U.S. is 731. Washington DC ranks the highest, with the average credit score for a home loan being 754, while Alabama ranks at the lowest with 713. But dont feel discouraged if your credit is below average. There are steps you can take to quickly boost your credit score.

Putting Credit Scores Into Context

Most lenders and creditors use FICOs credit scoring model to determine how likely you are to repay borrowed funds. However, some lenders use other credit scoring models. They use them to decide whether to approve your application, and what interest rate to charge you.

Since someone with a lower credit score is deemed less likely to repay the loan, theyll receive a higher interest rate as extra insurance to the lender in case the loan defaults.

FICO scores range from 300 to 850, with 850 being the highest score possible. Heres how those FICO scores break down into rating categories:

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What Is A Good Credit Score Range

Good credit score = 680 739: Credit scores around 700 are considered the threshold to good credit. Lenders are comfortable with this FICO score range, and the decision to extend credit is much easier. Borrowers in this range will almost always be approved for a loan and will be offered lower interest rates. If you have a 680 credit score and its moving up, youre definitely on the right track.

According to FICO, the median credit score in the U.S. is in this range, at 723. Borrowers with this good credit score are only delinquent 5% of the time.

Can I Buy A House With A 684 Credit Score

As mentioned above, a 680 credit score is high enough to qualify for most major home loan programs. That gives you some flexibility when choosing a home loan. You can decide which program will work best for you based on your down payment, monthly budget, and longterm goals not just your credit score.

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Younger People See Larger Uptick In Fico 8 Scores

In recent years, younger Americans have seen a bigger uptick in their FICO 8 credit scores compared with older adults. Between April 2017 and April 2022, the average score for adults 18 to 29 increased 24 points 19 points for those ages 30 to 39 19 points for 40- to 49-year-olds 13 points for people in their 50s and 10 points for consumers 60 and older.

Average Us Credit Score By Race

In a study conducted by the U.S. Fed, researchers found that Asian Americans have the highest average credit score, while Black Americans have the lowest average credit score. Moreover, Credit Sesame surveyed 5,000 U.S. adults and found that 54% of Black respondents had poor or fair credit . Conversely, only 37% of White Americans and 18% of Asian Americans suffer from the same affliction.

On top of that, 53% of Black respondents claim that they live paycheck-to-paycheck â which is higher than the overall average of 44% â and only 53% of respondents claim to have a credit card. In contrast, 67% of White Americans and 79% of Asian Americans reported having one credit card or more.

For context, healthy credit history is vital to increasing your credit score. And with Black Americans less likely to obtain a credit card, they often start their journey from a disadvantaged position.

For example, the Consumer Financial Protection Bureau found that Black and Hispanic Americans are more likely to have errors and disputes on their credit profiles than other races. And whether itâs auto loans, student loans, credit cards, or retail cards, jurisdictions with mostly White residents had less than half the number of disputes on their credit reports than jurisdictions with mostly Black residents.

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What Is The Average Credit Score By State

No matter the neighborhood, town, city, or state, credit scores range from person to person based on each individuals financial situationand NOT the location itself. Where you live is never considered when calculating your credit score.

Where there is a potential impact is with the different societal characteristics present in each state. Things like unemployment rates and income levels can potentially influence credit scores one way or another. For example, a state with higher employment and income levels may lead to its residents having a better ability to pay their credit card bills, get more credit, etc., and vice versa with states with lower employment and income levels.

With all of that in mind, you can see the different average FICO® credit scores from state to state:

Data from Experian

The Importance Of Monitoring Your Credit

The best advice when it comes to your credit score is simply to pay attention to it. Not only does this ensure you understand your score as it ebbs and flows, but it also allows any factual errors that could be affecting your score to be remedied.

You have three different credit reports to monitor Equifax®, Experian and TransUnion® and there are three basic ways to do it:

No matter how you choose to monitor your credit, dont turn a blind eye or put it off. Knowledge is power when it comes to credit. And now that youre armed with the knowledge and tools, you can look at your credit with an informed eye. So dont look away for too long.

Get Credit In Order

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Average Credit Score By Age

Millennials have an average credit score of 680, while baby boomers have an average credit score of 736.

The average FICO Score tends to improve with age.

The average credit scores coincide with the financial situations facing younger generations. Its usually around the millennial age range that major expenses and debt begin to rack up such as weddings and first mortgages, among others. Despite their ages, millennials hold an average of $4,322 in .

The other age group whose average credit score skews lower is Generation Z . A contributing factor to this is the limited access to credit this age group faces. Following the 2009 CARD Act, it became significantly harder for 18- to 21-year-olds to open new credit card accounts. As a result, many young adults dont begin building a credit file until later in life driving averages down.

Americans of all ages owe debt. In fact, U.S. household debt spiked to $14.35 trillion in the third quarter of 2020 the latest available data amid the coronavirus pandemic, according to the Federal Reserve Bank of New York. And that debt is growing while more people remain out of work. The federal unemployment rate was 3.5% in February 2020 before spiking to 14.8% in April 2020.

Keep Old Accounts Open

The last factor in credit scoring is the length of your credit history. This one takes time. But everyone has to start somewhere. What you do want to avoid is closing an account because you dont use it often or dont want it anymore. Killing your oldest account and removing that card from the mix could work against you by shortening your credit history. If you can avoid it, try to keep your oldest accounts open and in good standing.

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What Is The Average Credit Score By Age In The Us

The average credit score in the U.S. stands at 703 as of the second quarter of 2019, but this is not the same for everyone. For instance, Louisiana has the lowest average credit score of 685 in the U.S., while Minnesota has the highest average at 739.

Your age can also indirectly play a role in your score. While age itself is not a factor used in credit scoring reports, the age of your accounts is. The older you are, the older your accounts are and the higher your credit score is, mostly due to your extensive payment history. As people reach retirement age, they generally have less debt, which can improve credit scores.

Different age groups have varying averages, with consumers in their 20s having the lowest average score at 660. Those in their 60s have a significantly higher score as theyve built it over many years, with their average credit score standing at 733. Scores increase the most between 40 to 69, jumping an average of 20 points in each decade.

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Average Credit Score By Region

Lets break down the USA into the four regions used by the U.S. Census Bureau: Northeast, Midwest, West and South. As of 2019, the Northeast has the highest average FICO® Score at 717. All the states in this region fit into the first two columns on the map above.

The next highest is the Midwest at 716. The Midwest has a wider dispersion than the Northeast but has five states listed in the highest column: Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin.

The West comes in at 710 with the widest dispersion of the three regions. On one side, youve got Hawaii and Washington at 723, and on the other, theres Nevada and New Mexico at 686.

Rounding out the regions, the South has an average score of 688. Thirteen of the Souths 16 states fall into the bottom two columns. The only states that arent southern states in those columns are Indiana, Nevada and New Mexico.

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Why Is Your Credit Score Important

Your credit score is used to determine more than just the interest rate and terms such as down payment or size of credit line, for which you may qualify . Here the difference between fair and good is a big one, even though the numbers back into each other.

Being short just one point can put you in a lower and more expensive category. Credit scores, and the reports that create those scores, are increasingly used by insurance companies, landlords and even employers . This means your credit report or the score generated from it is likely to factor into the insurance rate you are charged, your acceptance for a new place to rent or lease or even a promotion at your job.

And when it comes to new loans, getting to the next tieror worse, falling into the lower oneis likely to mean real dollars, either up or down. So, finding out where you stand is crucial for the next step.

Average Credit Score In The Us

Research by Experian shows that the average VantageScore in the U.S. in 2021 is 695, and the median is 707. This is a slight increase from the previous year, where the average score was 688, and the median was 697. And the average FICO score currently sits at 716.

Average credit scores have been trending upward since the Great Recession when many people were struggling with layoffs, underwater mortgages and other financial problems. Despite the pandemic and its associated unemployment rates, credit score averages in the U.S. are up 20 points from pre-COVID levels.

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Fico Score Rating Categories

Now that you understand the basics of credit scores, are you ready for the big reveal?

According to MyFICO, the average FICO score in America for 2021 was 716.

If you look at the credit score range above, youll see that a credit score of 716 falls just within the good rating. An average FICO credit score of 716 FICO is a record high.

Since the average credit score falls within the good category, you can do quite a bit in terms of loans. An FHA home loan, for example, only requires a score of 580 to qualify and take advantage of the programs 3.5% down payment.

If you still qualify for the loan buy your score falls below that number, youll need to put down 10% of the loan price at the time of closing. For conventional loans, lenders usually require a minimum score of 660. So if your credit score is close to the average FICO score, your mortgage prospects look promising.

Reduce Your Total Debt

The amount of debt you have is one of the biggest factors that affects your credit score. Carrying a lot of debt, especially credit card debt, is a score killer that can make it hard to get approved for new cards or other loans. Debt on a maxed out credit card or debt that goes over your credit card limits is, not surprisingly, especially bad.

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Use Different Types Of Credit

Keeping your balances low isnt the only key to maintaining a good score and building a strong credit history. Having a diverse credit mix will also bode well for you in the long run. This should include both revolving and installment credit. Credit cards are revolving, while car loans and mortgages are installment credit. Your credit score considers how you handle both types of credit, which is why just having a fistful of credit cards wont help you as much as a credit card or two and a mortgage or other installment loan.

Positive Financial Trends Reversed In 2022

This year, inflation has set 40-year highs, interest rates have risen sharply, the stimulus spigot has run dry and gross domestic product fell in each of the first two quarters. With that as the backdrop, its actually remarkable that the average credit score has remained steady.

Were starting to see delinquencies rise on credit cards, car loans and other financial products. Theyre not yet at worrisome levels, but theyre not as remarkably low as they had been over the past two years. As of April 2022, FICO reported that 15 percent of the population missed a payments due date by at least 30 days in the previous year, one percentage point higher than April 2021. Payment history is the most heavily weighted factor in the FICO scoring formula.

The second-largest category is how much you owe, and that has been rising, too. Total consumer debt rose about 8 percent from the second quarter of 2021 to the second quarter of 2022, according to the New York Fed. Credit card balances jumped 13 percent during that span, the largest year-over-year expansion since the reports inception more than two decades ago. FICO says the average is just over 31 percent, which is up from 29.6 percent a year ago but down from 33 percent in April 2020.

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