Personal Finance News
Average FICO Credit Score Decreases for Third Straight Year
The latest FICO Score Credit Insights report finds that the average credit score ticked down once again.
About the Latest Average Credit Score Report:
According to the latest FICO data, the average American credit score is now 714. That’s down one point from last year and continues a slide that started in 2023 when the average score peaked at 718. This also marks the lowest average score since 2021. Meanwhile, the median credit score also ticked down from 745 to 744.
FICO says that the recent downward trend can partially be attributed to delinquent student loans once again being reported following a pandemic-era pause. There’s also been a slight increase in mortgage delinquencies. Still, the 714 average is still eight points higher than in 2019, with the median score rising 14 points in that same time period.
Despite the declining average score, a record number of Americans now have FICO scores exceeding 750. New data shows that 48.1% of consumers achieved scores in this range. For context, a 750 credit score is considered “Very Good,” while the “Excellent” category starts at 800. The maximum FICO score on most models is 850.
As mentioned, mortgage delinquencies have risen, now reaching pre-pandemic levels. However, FICO notes that delinquencies among auto loans, credit card balances, and personal loans have either leveled off or improved.
Elsewhere in FICO’s findings, Gen Zers are outpacing other generations of consumers when it comes to opening new credit cards. More than one in four Gen Z consumers with a FICO score opened at least one credit card in the past year.
What They’re Saying:
Discussing the results, FICO’s head of scores analytics Ethan Dornhelm said, “The resumption of required student loan payments and a continued, modest rise in mortgage delinquencies nudged the average score slightly lower. What makes this particularly interesting is that we’re simultaneously seeing a record share of consumers demonstrating strong, consistent credit behaviors. The result is a credit market that’s both more challenging for some and more rewarding for others — a dynamic that requires more nuanced strategies from lenders.”
My Thoughts:
Although seeing the average credit score decline can be concerning, it’s important to consider the greater context. For one, a 714 score is still very good. What’s more, while this latest number is down a couple of points from recent highs, it’s still well above where we were even 10 years ago. To me, that suggests that financial literacy and resources are making a difference.
At the same time, economic factors can sour things, and it seems that’s partially the case for this decline. Hopefully, consumers can weather the adversity and send scores back in the right direction in time.
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