Average U.S. FICO Score at 718

As the independent standard measure of US consumer credit risk, FICO® Scores are relied on to help lenders make accurate, objective, reliable, and more efficient credit risk decisions. FICO Scores are a dynamic sequence of three-digit numbers ranging from 300-850 and evolve as changes in consumer behavior are reflected in the data, which is maintained by the three primary U.S. consumer reporting agencies (CRAs), Equifax, TransUnion and Experian.

The average FICO® Score of U.S consumers can provide a baseline metric of the nation’s credit health.

The substantial increase in the average FICO® Score from 708 to 716 during the first year of the COVID-19 pandemic was followed by a leveling-off at 716 during the second year of the pandemic. During this latter period, the re-opening of the economy, ramping down of government stimulus programs and the return of payment accommodations to their pre-pandemic levels impacted consumer behavior, as missed payments and debt levels increased while credit seeking activity accelerated.

Now in 2023, the U.S. average FICO® Score as of April stands at 718. This is two points higher than the average FICO Score a year ago, and reflects the first time the metric has increased in more than two years as shown in Figure 1. A preliminary look at the July 2023 data shows the average score holding at 718, suggesting that the factors driving the 2-point year-over-year increase in the national average FICO Score have moderated over the past few months.

Some might be surprised by these findings, considering the uncertainty around increasing interest rates and high consumer prices, as well as the prospect of a looming recession that has some lenders tightening their credit standards. However, at this time, these effects seem to be offset in aggregate by a number of other developments, such as slowing inflation, lower U.S. Bureau of Labor Statistics unemployment numbers and the removal of certain medical collections data from consumer credit files.

Figure 1. The National Average FICO® Score Has Increased during the Third Year of the Pandemic

Figure 2. National FICO® Score Distribution Shows More Consumers Scoring 800+ as of April 2023.

Let’s dive into some of the key trends impacting overall consumer credit files and credit health in a bit more depth:

• Certain medical collections data now removed from credit files: The CRAs announced that, as of April 2023, medical collection accounts under $500 have been removed from consumer credit files. Even though only a relatively small percentage of the FICO scorable population may have seen a score change from this action, those who had at least one medical collection removed from their credit report between April 2022 and April 2023 may have had an increase in their average FICO® Score over that period.   
• Missed payments are rising: Missed payments reported in the credit file continue to increase. As of April 2023, just over 17% of the population had a 30+ day past-due missed payment in the past year. This is up by 14% compared to April 2022. The percentage of the population with more serious delinquencies on their credit report has gone up as well. As of April 2023, just over 7% of the population had a 90+ day past-due missed payment in the past six months. This is up by 24% compared to April 2022.

While missed payments on mortgages and auto loans are up, they are still below their pre-pandemic levels. During the first year of the pandemic, payment accommodations reported in the credit bureau data were consistently higher for mortgages and auto loans than for any other products.

Missed payments on bankcards are up, and now slightly surpass their pre-pandemic levels. The residual impact of last year’s record-high inflation rates, as well as ongoing increases in interest rates, have contributed to elevated debt levels and some consumers falling behind on their credit card payments, especially those with higher credit utilization who make purchases on their credit cards to cover their expenses. Paying bills on time can have a significant and positive impact on the FICO® Score with the “Payment History” category representing some 35% of the overall FICO Score calculation.        

• Consumer debt is higher than pre-pandemic levels: As of April 2023, the average credit card utilization was at 34%. This is up from 31% as of April 2022. The latest report from the New York Fed shows that credit card balances were at $986 billion in Q1 of 2023, up from $841 billion in Q1 of 2022. And new data from the Federal Reserve indicates that revolving credit, which can be viewed as a proxy for credit cards, increased at an annual rate of 13.1% in April 2023.

To curb rising inflation, the U.S. Federal Reserve has been raising interest rates since mid-2022. Even though inflation is slowing down, consumer prices remain high. These higher interest rates and elevated consumer prices, coupled with the removal of safety nets introduced at the onset of the pandemic to mitigate the financial impact of COVID-related income loss and the full re-opening of the economy, are drivers of consumers carrying increased levels of debt, especially those with high debt-to-income levels and few financial lifelines to cover living expenses. Keeping balances low on credit cards can have a substantial and positive influence on credit scores. In fact, the “Amounts Owed” category, which is heavily weighted towards credit card balances and utilization represents some 30% of the overall FICO® Score calculation.   

• New credit activity slows down: As of April 2023, 45.5% of the population has opened at least one new account in the past year. This is down from both 47.6% as of April 2022 and 47.3% as of April 2020. This decrease from April 2022 to April 2023 was likely driven by declining mortgage origination volumes. The new report from the New York Fed shows that mortgage origination volumes dropped from $859 billion in Q1 of 2022 to $324 billion in Q1 of 2023 -- the lowest seen in almost 10 years. Rising interest rates have led to a cooling-off of the housing market, both in terms of housing demand and prices, resulting in reduced equity for homeowners and a higher interest burden on home buyers, particularly first-time buyers. While still higher than pre-pandemic levels, auto loan and lease origination volumes decreased as well, from $177 billion in Q1 of 2022 to $162 billion in Q1 of 2023. Whether due to increases in the cost of securing and carrying debt, or simply due to shifting their focus to managing their available credit, fewer consumers have obtained credit in the last year. The “New Credit” category comprises 10% of the FICO® Score calculation, and this deceleration in credit-seeking behavior is to a certain extent negating the effects of increases in delinquency and debt levels.

Figure 3. FICO® Score Population Shows Degradation in Key Metrics During the Third Year of the Pandemic.
 

Figure 3 indicates increasing missed payments and revolving debt. However, these recent developments in consumer credit behavior are yet not substantial enough in aggregate to offset other factors, such as the solid employment picture, removal of certain medical collections from the credit file, and reduced credit-seeking behavior. As a result, the national FICO® Score distribution has not shown a recent downward trend. The FICO Score is a lagging, not leading, economic indicator, and as noted above, the average FICO Score has largely stabilized over the past few months, with the average national FICO Score holding steady at 718 since April.

Will missed payments and debt levels continue to ramp up, to the point where aggregate consumer FICO® Score trends are driven downward? Or will a stable jobs market and decreasing inflation drive the average credit score further upward? We will continue reporting on these trends, while hewing to our mission: help lenders understand the credit risk that each borrower represents and make better-informed lending decisions while also empowering and educating consumers on how to achieve a good credit score. Through portals such as myFICO and programs such as Score A Better Future and FICO® Score Open Access, we are committed to empowering consumers to better understand their credit score health. We will also continue to invest heavily into efforts to offer alternative data-driven credit score solutions, such as FICO® Score XD and the UltraFICO® Score, to provide millions of consumers with an onramp to mainstream credit.

To learn more about FICO® Scores, check out these resources:

How is FICO helping with financial inclusion?

The FICO® Score is Built to Last

FICO® Scores vs. Credit Scores