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Average Credit Score in the United States: 2018 Overview

Last Updated: November 27, 2018

You will undergo a credit check anytime you apply for a credit card, seek a loan, or rent an apartment. Additionally, employers, insurance companies, and a variety of other institutions use these checks as part of their due diligence. Considering how important this metric is, it is natural to wonder what the average credit score in the United States is. Below, we address that question and much more.

What Affects Your Credit Score

Before talking about the average credit score, let’s discuss the mechanics behind your rating. The purpose of you having a credit score is to show companies how safe of an investment you are. The reason they do this is to protect themselves against significant losses. To understand this concept, imagine a world where credit scores don’t exist. How could a lender give you a mortgage without know who you are or what your financial past is? These companies would likely go out of business because so many borrowers default on loans, and then nobody would get credit. Your score is made up of the following 5 aspects.

  • Payment History
  • Amount of Debt You Owe
  • Length of Credit History
  • A mix of Credit Accounts
  • New Credit Inquiries

If you break each one of these factors down, you find that they belong on the list of metrics that affect your score. Borrowers that pay on time, don’t have debt, have a long history of payments, manage multiple loans at once, and infrequently open new credit cards are reliable, and thus have a high score. If a consumer has the opposite characteristics, their score is deservedly lower.

Standard Credit Score Range

Generally, scores are broken up into ranges and given a description, like “poor” or “excellent.”. What confuses consumers about this idea is that every financial institution has unique ranges. For one lender, you might be in their “average” category, while you’d be in a higher designation with another. Though ranges differ from company to company, you can still learn from the standard distribution below.

720+: Excellent
660 – 719: Fair
620 – 659: Poor
620 or lower: Bad

The consequences of the range you are in are numerous, but the most common are in the domains of credit application acceptances, interest rates, and apartment rentals. If your score is high, you will enjoy easy acceptance and favorable terms. If it is not, you will struggle.

Average Credit Score Among All Consumers

Currently, the average credit score in the United States is roughly 695. We say “roughly” because different models and scoring averages come up with slightly different results. Still, all of them are relatively similar, so there is not a significant difference between these methods. Lenders are very happy with the current number, 695. The reason is that in the 2008 financial crisis, many people defaulted on loans and saw their scores drop. Now, ratings are going up. This trend signals a rise in overall economic health around the country, more trust between lenders and borrowers, and favorable lending deals for consumers.

How Age Impacts Credit Score

Though learning the average credit score is useful, breaking it down factor by factor is even more interesting. One of the best ways to do so is by age. The critical trend is that credit scores rise as people age. This makes sense for a variety of reasons. First, older people have more time to build up a credit history. Second, people generally become more financially responsible with age. And third, consumers tend to make more money as they age, giving them greater ability to stay ahead of debt. One anomaly in this trend is the citizens aged 30-39 have more poor scores than the 30 or younger population. Though we do not know this for sure, our best guess is that this trend comes from the large purchases that come up in your 30’s like weddings and homes.

What Affects Your Credit Score

Income

Another average credit score trend that is worth your attention is income. As you might imagine, higher earnings correlate with better credit scores. This effect makes sense when you look at what affects your score. Those that earn more are more likely to exhibit the following behaviors.

Timely Payments

While there are plenty of irresponsible high-earners, they are better at paying their bills than the rest of the population. Additionally, having a significant sum of money makes finances easier. While you can still overspend on luxury items, you have a much better shot than those who are struggling.

Have Less Debt/Utilization

If you carry a significant amount of credit card debt, your score will drop. High earners rarely run into this problem for two reasons. First, they have the income to pay their bills, so they don’t accrue debt. Second, they usually have higher credit limits, which makes their penalties lower if they do carry debt.

Have a Mix of Credit

Often, lower earners cannot afford a car or home, and their score suffers because of it. High-income individuals have the money to take out multiple types of credit, which raises their scores.

Ultimately, income directly influences 3 of the 5 aspects of credit scores. This fact explains why high earners have better standing with lenders.

Where You Live Matters

A trend that is less obvious is the average credit score by state. The reason is that there are many theories you could adopt. When you examine the data, you find that in general, northern states have the highest credit scores, while southern states have the lowest (source: Experian).

Top 5
Minnesota
North Dakota
South Dakota
Vermont
New Hampshire

Bottom 5
Nevada
Texas
Mississippi
Louisiana
Georgia

Financial analysts have many theories about why this might be. The most compelling is general poverty. The south is the poorest regions of the United States, and on average, lower income groups have bad scores. Two factors cause this. First, low-income individuals are more likely to commit credit errors, which lead to a depressed score. Second, this population tends to not open lines of credit at all, which gives them too little data.

As far as the upper end of the spectrum, wealth could play a factor, but that theory is not as compelling in this context. Instead, the higher scores in these states are somewhat of a mystery.

Buying A Home

On average, home buyers have a score of 728, which is slightly higher than the US average. The reason for this likely comes down to income. As earnings grow, credit rating and general financial well being do too. Additionally, home buyers are often older than the rest of the population. For this reason, they will have longer credit histories and thus, higher scores. This is a crucial factor for them, too, as credit rating has a substantial effect on mortgage terms. Those with high scores are likely to be accepted and pay low-interest rates, while those with lower scores experience the opposite. This is likely another reason why home buyers have a higher score: Those with lower ratings don’t bother because they know they won’t get a good deal.

As you now know, there is a lot to unpack when discussing the average credit score of United States consumers. While financial habits are the direct driver of ratings, there are also many correlations that are worth knowing. What you can do with this knowledge is use it to build your credit score to the average level, and then beyond.

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