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The average credit score in the U.S. has hit a historic high of 718, according to a new report from FICO, the leading credit score analytics provider. After the score stayed stuck at 716 in 2021 and 2022, its recent rise is confounding.
That’s because consumers have racked up massive debt over the past couple of years. From high mortgage payments to expensive credit cards, everyone’s spending more thanks to inflation, rising interest rates and a tight housing market.
What’s going on here?
Ethan Dornhelm, FICO’s vice president of scores and predictive analytics, says that changes in credit reporting rules and consumer behavior may help explain the combination of higher FICO scores and mounting consumer debt. “The three drivers for higher scores that really stick out to me,” he says, “are a drop in credit-seeking behavior, some medical debt that’s been removed from reports and the continued education and empowerment in understanding credit data and credit score.”
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Consumers Don’t Want New Credit
The number of new credit accounts you have is one of the five components of your FICO credit score calculation, accounting for 10% of the score. The other four components are payment history (35%), amounts owed (30%), length of credit history (15%) and credit mix (10%).
Dornhelm notes that, according to FICO’s data, fewer people are applying for and getting new credit.
“The rate of hard inquiries and new lines of credit has dropped in recent months,” Dornhelm says.
Your Medical Debt May Have Been Erased
Although just a small percentage of consumers carry significant medical debt—around 10%—new policies around medical debt reporting may also be helping to boost credit scores.
Earlier this year, the three main credit reporting bureaus, Equifax, Experian and TransUnion, adopted policies to remove any medical debt under $500 that was reported by collection agencies. That move came after the agencies’ decision to remove all paid medical debt from credit reports starting in July 2022.
You May Be Paying Closer Attention
More consumer awareness about the importance of good credit may be another factor in higher FICO scores, Dornhelm says.
Errors in a credit report can bring your credit score down, and they’re common. According to a Consumer Reports survey of 7,000 consumers, more than one-third (34%) of respondents said they found at least one error on their report, 29% noticed errors in personal information and 11% discovered account information errors.
But people who check their credit reports often are more likely to spot errors and correct them.
Prompt Mortgage Payments Raise Scores, but Renters Get Little Reward
Mortgage payments are regularly reported to the credit bureaus, so making your payments on time can significantly improve your score, even if you’re also carrying more debt. On a larger scale, recent data from across the nation reveals an all-time low for serious mortgage delinquencies–payments that are late by 90 days or more–according to analysis by CoreLogic, a data analytics company.
Renters, though, aren’t typically rewarded for prompt payments, says Dornhelm. “FICO did an analysis that showed 2% to 3% of renters had their rent reported,” he says. “The entire credit reporting system is voluntary…So property owners may not want to subject themselves to the [Fair Credit Reporting Act] if they don’t have to.”
How To Maintain a High Credit Score
- You can (and should) get your free FICO Score as often as possible. Consumers are entitled to one free credit report from each of the main credit reporting agencies each year. You can get all three at once or stagger them throughout the year.
- Use your credit card to check your credit score. Many credit card companies offer free credit reports and credit scores. If yours does, that can be an easy and inexpensive way to keep an eye on your credit profile.
- Look over your credit reports carefully. The credit bureaus sometimes have incorrect information, and some of it is disallowed. If you spot paid medical debt or medical debt under $500 on any of your credit reports, for example, contact the reporting agencies immediately.
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FAQs
Mortgage payments are regularly reported to the credit bureaus, so making your payments on time can significantly improve your score, even if you're also carrying more debt.
Why are credit scores rising? ›
Credit scores rose as consumers took on more debt
As higher prices weighed on most Americans' financial standing, consumers, as a whole, have fallen deeper in debt, causing an increase in credit card balances and an uptick in missed payments.
What makes your credit score go up? ›
Ways to improve your credit score
Paying your loans on time. Not getting too close to your credit limit. Having a long credit history. Making sure your credit report doesn't have errors.
Why did my credit score go up for no reason? ›
There are any number of reasons your credit score can change even if you don't take any specific action, including routine updates to the credit reports that are used to calculate your scores, progress paying down loans and even just the passage of time.
Why didn't my credit score go up after paying off debt? ›
Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio. While in some cases your credit scores may dip slightly from paying off debt, that doesn't mean you should ever ignore what you owe.
What's the highest credit score? ›
The highest score you can have on the most widely used scales is 850. According to data from FICO, about 1.7% of all FICO scores were at the coveted 850 as of April 2023. And even if you do get there, the fluctuating nature of credit scores means you're unlikely to keep it month after month.
Why did my credit score go up when nothing changed? ›
I didn't make any changes to my credit, why did my credit score change? Even if you don't make any major changes to your credit activity, your credit scores can change depending on things such as your existing accounts age, you make on-time payments, or pay off debt.
What are 3 C's of credit? ›
The factors that determine your credit score are called The Three C's of Credit – Character, Capital and Capacity.
Does credit score go up easily? ›
In fact, some consumers may even see their credit scores rise as much as 100 points in 30 days. Steps you can take to raise your credit score quickly include: Lower your credit utilization rate. Ask for late payment forgiveness.
What are the 5 main factors that make up your credit score? ›
Credit 101: What Are the 5 Factors That Affect Your Credit Score?
- Your payment history (35 percent) ...
- Amounts owed (30 percent) ...
- Length of your credit history (15 percent) ...
- Your credit mix (10 percent) ...
- Any new credit (10 percent)
Credit utilization — the portion of your credit limits that you are currently using — is a significant factor in credit scores. It is one reason your credit score could drop a little after you pay off debt, particularly if you close the account.
How to raise your credit score 200 points in 30 days? ›
How to Raise your Credit Score by 200 Points in 30 Days?
- Be a Responsible Payer. ...
- Limit your Loan and Credit Card Applications. ...
- Lower your Credit Utilisation Rate. ...
- Raise Dispute for Inaccuracies in your Credit Report. ...
- Do not Close Old Accounts.
Your 800 FICO® Score falls in the range of scores, from 800 to 850, that is categorized as Exceptional. Your FICO® Score is well above the average credit score, and you are likely to receive easy approvals when applying for new credit. 21% of all consumers have FICO® Scores in the Exceptional range.
How to get 800 credit score? ›
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
Should I pay off my credit card in full or leave a small balance? ›
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
Is 700 a good credit score? ›
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score☉ in the U.S. reached 714.
What is the average credit score for a 40 year old? ›
Here's the average credit score by generation as of the second quarter of 2023, according to Experian: Gen Z (18 to 26): 680. Millennials (27 to 42): 690. Gen X (43 to 58): 709.
What is the US average credit score? ›
What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
Is 710 a good credit score? ›
A 710 credit score is a good credit score. The good-credit range includes scores of 700 to 749, while an excellent credit score is 750 to 850, and people with scores this high are in a good position to qualify for the best possible mortgages, auto loans and credit cards, among other things.
