Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Understanding the Rise in Average FICO Scores in the U.S. and What It Means for You
The average FICO® Score in the United States has been on a steady climb, reaching 715 in 2023, according to Experian data. This marks the 10th consecutive year without a decline in the average score, a trend that began in 2013. Despite economic challenges, consumer finances have remained robust, contributing to this upward trajectory. Let’s delve into the factors influencing these changes and what they mean for you.
Key Highlights of Consumer Credit in 2023
Several factors have contributed to the increase in average FICO® Scores over the past decade. Economic growth, near-full employment levels, lower delinquency rates, and a more informed consumer base have all played significant roles. The pandemic-induced recession of 2020 was an anomaly, but overall, consumers have become more aware of the importance of maintaining good credit scores.
Average FICO® Score in the U.S. Climbs to 715
Throughout 2023, the average FICO® Score fluctuated slightly, peaking at 716 during the summer before settling at 715 by the end of Q3. Despite this stability, average loan balances and interest rates have increased sharply as the Federal Reserve raised the key fed funds rate to combat inflation.
Average Credit Scores by Age
Credit scores have increased slightly across most age groups, with the Silent Generation being the only exception. Younger generations generally have good credit scores, while older generations boast very good scores. This trend highlights the importance of credit history length, which naturally benefits older consumers.
Average Credit Score by Age
| Generation (Age) | 2022 | 2023 |
|---|---|---|
| Silent Generation (78+) | 760 | 760 |
| Baby Boomers (59-77) | 743 | 745 |
| Generation X (43-58) | 707 | 709 |
| Millennials (27-42) | 687 | 690 |
| Generation Z (18-26) | 679 | 680 |
Average Credit Score by State
Most states saw little to no change in their average FICO® Scores from 2022 to 2023, indicating stable consumer credit across the country. However, states like Kentucky, Maine, New Mexico, Oklahoma, South Carolina, and West Virginia experienced notable increases.
Average FICO® Score by State
| State | 2022 | 2023 | Change (Points) |
|---|---|---|---|
| Alabama | 691 | 692 | +1 |
| Alaska | 723 | 722 | -1 |
Credit Utilization Ratios and Their Impact
Lenders have become more cautious about extending credit, leading to tighter credit limits. Combined with an increase in credit card balances, this has resulted in consumers using 30% of their available credit, up from 28% in 2022. Higher utilization ratios can negatively impact credit scores, especially for those with lower scores.
Delinquency Rates Return to Normal Levels
Delinquency rates, which were unusually low during the pandemic, have returned to more typical levels. As of Q3 2023, 2.45% of credit card accounts were 30 or more days past due, up from 2.07% in Q3 2022. However, mortgage delinquencies remain low, with only 1.88% of mortgage borrowers behind on their payments.
Where Consumers Stand Heading Into 2024
As we approach 2024, average balances for most types of debt have increased, but the rate of increase has slowed compared to previous years. This slowdown is partly due to reduced inflation throughout 2023. Despite higher debt levels, average FICO® Scores remain healthy, with a slight increase from 714 to 715 in 2023.
Why Are Average Scores Higher Than 10 Years Ago?
Several factors have contributed to the steady increase in average FICO® Scores over the past decade. Decreasing unemployment levels, demographic changes, and improved credit education have all played significant roles. More consumers are now aware of the importance of paying their bills on time, which has positively impacted credit scores.
Most Consumers Know Their Credit Score
According to a survey conducted by Experian in November 2023, nearly 4 in 5 consumers claim to know their credit score. Younger consumers (ages 18 to 24) are less certain, likely because they are just beginning to manage their finances independently.
How to Improve Your Credit Score
If you’re looking to improve your credit score, here are some key strategies:
- Pay your bills on time: Late payments can significantly impact your credit score.
- Reduce credit card balances: Lowering your credit utilization ratio can quickly improve your score.
- Apply for credit only when needed: Frequent credit inquiries can temporarily lower your score.
By following these tips, you can improve your credit score over time, making you eligible for better loan and credit card offers.
Contact O1ne Mortgage for Your Mortgage Needs
At O1ne Mortgage, we understand the importance of maintaining a good credit score. Whether you’re looking to buy a new home or refinance your existing mortgage, our team of experts is here to help. Call us today at 213-732-3074 for personalized mortgage services tailored to your needs. Let us help you achieve your financial goals with confidence.
Remember, a good credit score opens doors to better financial opportunities. Stay informed, stay proactive, and let O1ne Mortgage be your trusted partner in your financial journey.
