Average Credit Score
Credit History
If you have opened credit cards in the last ten years, you probably already have a FICO score. If you’ve paid off your balance in full or on time, your score is likely high. If not, your score will be lower. A credit report shows you how much debt you have, the amount of available credit, and the frequency of late payments. If you’ve missed any payments over 30 days, your lender will report it to your credit bureau, which will lower your score. But if you’ve paid off your debts on time and have made all your payments on time, your score will go up.
If you’re a millennial, your average credit score is 740. It’s normal to have a lower score than someone in their thirties, but you might want to start building your credit score while you’re young. Many borrowers in their twenties have a student credit card with a low limit and are also making payments on their student loans. Low income, short payment histories, and high debt utilisation can lower your score.
Age is another factor that determines a person’s credit score. In general, the older a person is, the higher their score is. However, people with a short credit history can get favourable scores, too. Young people who have opened too many new accounts can lower their scores compared to older consumers with established credit history. And while the number of new accounts may be high, the length of time spent managing credit accounts is still a factor.
Credit scores vary significantly from one another. The differences could be a few points or a couple hundred. That’s why it’s so important to monitor your reports and sign up for alerts when your score changes. You should review your credit report regularly and dispute inaccuracies immediately. This will improve your credit score, and the willingness of lenders to extend your credit. Just make sure you use your credit responsibly.
Debt Levels
The average credit score and debt levels remain relatively stable in 2019, as the delinquency rate remains extremely low and the total debt load appears to be well within Americans’ incomes. However, the COVID-19 relief efforts and special payment policies of lenders are likely to expire in a few years, and this could erode the buying power of Americans. The best way to lower debt is to pay your bills on time, switch to a 0% balance transfer card, or increase your income.
Income Levels
One of the most common questions about the relationship between income level and average credit score is whether the average FICO score is related to an individual’s income. According to the Federal Reserve, income and credit score have a moderate correlation. However, income may also have a bearing on other factors such as age and college education. For this reason, the relationship between income and FICO scores may be less clear than it appears at first glance.
State-level Averages
As of April 2019, the state-level average credit score was 706. There were 31 states with an increase above that number, including the Dakotas, Hawaii, Vermont, and New Hampshire. In contrast, Mississippi had the lowest average FICO score of any state, followed by Alabama and Louisiana. However, the increase in average FICO scores over time was not uniform across states, with a large variation among them. States with lower average credit scores may experience greater gains. State-level averages of FICO scores may reflect your current financial situation.
Large cities located in the south of the country generally have lower average FICO scores. But there are many cities with higher FICO scores. Cities in the southwest, such as Phoenix and Las Vegas, have higher average FICO scores than the cities in the northeast and midwest. These cities differ in the proportion of people with over 70% revolving balances. These factors can affect the length of credit history and the ability to obtain new credit.
Consumers’ credit scores vary greatly. While there are some states with higher credit scores, the nationwide average FICO score for consumers with a credit card is 698.
Various factors impact the average credit score. Higher-cost-of-living states have better credit scores than lower-cost states. However, smaller populations can lead to better credit scores and vice versa. This trend seems to be permanent. As long as the economy is improving, consumers will be able to get loans and live comfortably. And while the coronavirus pandemic has affected U.S. consumers, the average FICO score is set to stay up.
