Average Credit Scores by Race

Studies of average credit scores show substantial disparities among different racial and ethnic groups. This article looks at those disparities and some possible reasons for them.

What Credit Score Studies Have Found

The average credit score across all Americans was 717 as of October 2023, according to FICO. This is a one-point drop from the previous score reported in July 2023. The decrease was due to a rise in missed payments and more consumer debt. VantageScore, which is a credit scoring model reported by the three credit reporting bureaus, reported an increase in the average credit score from 701 to 702 in its March 2024 report. The increase was related to a drop in delinquencies and credit usage.

The Urban Institute compared median credit scores in majority Black, majority White, majority Hispanic, and majority Native American communities. The White and Hispanic communities had the highest median scores, while the Black and Native American communities had the lowest. The study didn't include majority-Asian communities but did have a category for all communities. The table below breaks down the credit scores and their ranges for VantageScore (the basis for the study's scores) and FICO.

The group also looked at the median credit scores of young Americans by race, which varies by age group. It reported the following for people between 25 and 29:

• Majority-Black communities had a median credit score of 582
• Majority-Hispanic communities had a median credit score of 644
• Majority-White communities had a median credit score of 687

What Do Credit Scores Measure?

Credit scores measure a variety of financial factors but do not take into account the person's race, age, income, or where they live. Still, disparities can be driven by differences in how much debt a consumer has, whether they've ever had a credit card and for how long, and whether they are a homeowner with a mortgage—all of which can vary by race.

For example, "Black and African American college graduates owe an average of $25,000 more in student loan debt than White college graduates," according to the Education Data Initiative. That debt burden can make it difficult to keep up with other payments, potentially resulting in a lower credit score. It can also make it difficult to obtain a mortgage to purchase a home.

Credit scoring models tend to favor homeownership, tracking payments on mortgages but generally not rent or utilities. Since renters make up a higher percentage of Black and Hispanic households compared with White and Asian ones, fewer Black and Hispanic consumers can benefit from mortgage-related inputs to their score, while a pristine rent payment record may have no impact. Newer credit scoring models, such as VantageScore 4.0, try to address that by factoring in rent and utility payments if they are reported to the major credit bureaus.

How Credit Scoring Works

Both FICO and VantageScore have multiple scoring models, some for specific types of lending, such as credit cards vs. auto loans. Their scores are based on data in the credit reports compiled by one or more of the three major national credit bureaus (Equifax, Experian, and TransUnion), and because not all creditors supply information to every bureau, credit reports can differ from one bureau to another.

FICO and VantageScore each generate scores on a scale of 300 to 850 and use relatively similar criteria. FICO, which is the older of the two companies, remains the most commonly used system. The two factors that have the biggest impact on an individual's credit score are:

• How regularly they pay their debts on time, which accounts for 35% of their score.
• How much credit they have available and how much they are currently using (a figure known as their credit utilization ratio), which accounts for 30%.

In other words, those two factors add up to almost two-thirds of a person's score.

Weighted less heavily but still important are how long they've had credit accounts (longer is better), how many times they've applied for new credit in the last 12 months (fewer is better), and whether or not they show a mix of credit types, such as a credit card, mortgage, and auto loan (some variety is good).

What Is Considered Good Credit?

Experian, one of the three major credit reporting companies, divides the quality of credit into five tiers, beginning with Poor and culminating at Exceptional. Anything below 580 is considered Poor, and it takes a score of at least 670 to move into the Good range. A Fair score falls between the two. Very Good begins at 740, and those with a score of 800 or more enjoy the label of Exceptional.

The Bottom Line

Average credit scores in the U.S. differ by race, age, and other factors. At least part of that has to do with the factors that go into computing credit scores and how those factors are weighted, which tend to benefit some groups more than others.