Your credit scores aren’t something that you should just set on a shelf and forget about for any extended period. It’s important to keep an eye on the health of your credit — that includes your credit reports from Equifax, TransUnion, and Experian and the various credit scores associated with each of those reports.
And, just to see where you rank nationally, you may want to pay attention to how your credit scores stack up relative to the average FICO Score.
Let’s cut to the chase. The average FICO score in the United States has reached a new all-time high of 716. And this is in the wake of a global pandemic.
Now let’s take a deep dive into the average and how credit scores have changed over time as well as possible reasons why FICO scores have continued to trend upward for the past seven and a half years.
The Average FICO Score — Now and Then
The FICO score came on the scene initially in 1989 with Equifax and then with all three major credit reporting agencies by 1991. By 1993, lenders were using specialized FICO scores in the credit card, auto, installment loan, and personal finance industries.
Credit scores have influenced the ability of consumers to qualify for various financing products for more than 30 years. So it makes sense that consumers would want to learn as much as possible about how to earn and keep good credit scores.
The good news is that Americans have been doing well where credit scores are concerned for quite a while, despite all of the negative noise coming from a vocal minority.
Since October 2013, the average FICO® Score has been on the rise in the United States — climbing from 690 to an all-time high of 716 in April 2021.
The average FICO scores over the last 10 years:
|Average FICO Score||Date|
It’s interesting to note that between April 2020 and April 2021, the average FICO score increased a sizable eight points. This average point increase was more pronounced than previous year-over-year changes, and the trend also held steady across the country.
In each of the 50 states and the District of Columbia, the average FICO score increased between April 2020 and April 2021.
FICO Score Distribution
While the average FICO Score is 716 as of April 2021, it’s possible to earn credit scores that fall much lower or higher, depending on the details of your credit reports.
The higher your credit score climbs on the scale, the lower your credit risk. Higher credit scores mean you’re more likely to qualify for financing products, including credit cards and loans, and that you’re more likely to receive better interest rates and terms.
Below is a breakdown of how FICO score distribution has behaved in the United States over the past five years. Each of the values in the boxes/cells below equals the percentage of the scorable US population. The values may not add up to 100% across the horizontal axis because of rounding.
The upward shift in FICO scores has been the most noticeable among consumers who have lower credit scores. FICO notes that consumers in the 550-599 range experienced an average FICO score increase from 581 to 601 between April 2020 and April 2021.
Why Credit Scores Are Improving
Any time the national credit score average changes, something is behind the shift. Here are several events contributing to the recent upward trend in consumer credit scores:
- Better access to credit reports and scores. It’s easier than ever before for consumers to access their credit information — whether it’s their credit reports or credit scores. The Fair Credit Reporting Act (FCRA) gives consumers the right to free copies of their credit reports from all three major credit reporting agencies once every 12 months. Plus, the credit bureaus are giving consumers free weekly access to their credit reports on a voluntary basis in response to the COVID-19 pandemic. Many credit card issuers give customers free access to their credit scores each month as well.
- More people are paying on time. Late payments have the potential to do serious credit score damage. Yet the percentage of the population with a 30-day (or worse) past due missed payment on their credit report was down in April 2021 compared with the previous year. In April of 2021, only 15% of consumers had a 30-day (or worse) late payment in the last year compared with 19.6% of consumers in April 2020. When fewer people have late payments and past-due accounts on their credit reports, it’s no surprise that credit scores rise in response to those good credit behaviors.
- People are paying down debt. In April 2020, the average credit card utilization rate in the US was 33%. Fast forward to a year later, and that figure dropped to 30%. Average credit card balances also declined from $6,277 to $5,591 during that same time, according to FICO. Credit scores heavily emphasize how you manage your debts, especially your credit utilization ratio. So, when there’s a significant overall decrease in consumer credit utilization, it makes sense that credit scores would rise in response.
In sum, credit scoring systems love to see less debt and fewer late payments on credit reports. When you achieve these two relatively common sense goals of proper credit management, it’s almost impossible not to have great credit scores.
Because your credit scores and reports play an important role in your overall financial health, reviewing your credit information frequently is important to make sure you keep your credit in the best shape possible.
Make it a goal to check your credit reports at least once a quarter (or more often) to help avoid unpleasant surprises.