How Do You Compare to the Average Credit Score in the US?
Cue the band, roll out the red carpet, and drop the confetti, because America just got some great (credit score) news: the average U.S. FICO score has reached 700.
FICO, which is one of several credit scoring models but also the most widely used one by lenders, including mortgage lenders, reported that the average score hit 700 for the first time ever. FICO scores are based on a 300-850, and lenders and creditors usually consider above 740 as “prime” credit, giving the borrower access to the best possible interest rates and loans.
Credit scores typically break down as follows:
740 to 799:
Score: Very Good
670 to 739:
580 to 669:
579 and lower:
But, until now, the average FICO score was not even 700 – or in the Average/Fair range. In fact, FICO found that only in the spring of 2017 did the average credit score hit that mark. But it can’t be considered a surprise, as scores have been trending upwards steadily since the Great Recession when the average score was closer to 690.
At that time, rampant, foreclosures, short sales, bankruptcies, missed payments and loan defaults sunk America’s collective credit score like a stone. But the recovery has been impressive since then, particularly because FICO sees the increase partly as a function of better education about credit and more responsible spending habits by consumers.
“The relative strength of the economy,” says Ethan Dornhelm, FICO’s vice president for scores and analytics, “with low unemployment and rising home prices are helping those consumers who were struggling during the great recession to recover financially.”
FICO has been keeping records on average credit scores since 2005 (12 years ago.) Back then, the nation’s average credit score was only 688, with 36.9% of all consumers below the 620 mark.
At its low point in 2009 and 2010 due to the recession, the average FICO hit 687 (both years). But scores have risen steadily since then, with 690 in both 2011 and 2012, 691 in 2013, 693 in 2014, and 695 in 2015 before climbing past the 700 mark in early 2017.
While we’re talking about the average score, FICO notes that its seen a trend of credit score increases at the top and the bottom of the credit score range. According to the credit scoring giant, there are more high-end borrowers with scores of over 800, or the “super prime” range, and also fewer borrowers missing payments, defaulting, and spending recklessly at the bottom end of scores.
Another milestone FICO reports is that for the first time, there are more borrowers with credit scores of 800 than those with scores of 600 or below.
But could FICO’s data be an anomaly? Not if we look at similar data by Experian, who rolls out their own VantageScore credit model.
According to Experian’s annual “State of Credit” study, the nation’s average score has climbed to 673, up from 669 only last year. (Vantage scores are also based on a 300 to 850 scale.)
Other interesting data shows that about 14% of the U.S. population has no credit score at all, and is considered credit invisible.
The 30-39-year-old age bracket pulls the average down, since they’re the largest age bracket with sub-620 scores, and Millenials and adults below 30 years old also skew the numbers lower.
For today’s homebuyers, the average credit score is now 728 – significantly higher than the national average, based on a survey of 85,369 mortgage applicants conducted by the Federal Reserve. They found that only 6.8% of home buyers had scores below 620.
Do you have a 700 FICO score? Contact us to find out, and if you’re thinking of buying a home soon, we definitely can help boost your score, so you’ll qualify for the best, lowest-interest mortgage!