Personal Finance

Average FICO Score Climbed to New Record High in July

Believe it or not, credit scores are now at the highest level they’ve ever been. This week, FICO revealed that the average credit score in the United States reached 711 as of July. The new average is five points higher than what was seen one year ago and three points higher than in April of this year. Looking further back, it’s an impressive gain from when the average first broke through the 700 mark in 2017 and is remarkably higher than the 688 average recorded 15 years ago in 2005.

Contributing to the upward trajectory of scores was a drop in missed payments. In July of this year, 7.3% of Americans had delinquent payments that were more than 90 days past due compared to 8.1% back in January. Meanwhile, the average debt load was also down. As of July, the average U.S. consumer had $6,004 in credit card debt whereas the average sat at $6,934 earlier this year (although it’s worth noting that January often sees higher balances due to the winter holidays).

Of course, news of the increasing average comes during a global health crisis that has also sent the United States into a recession. As a result, some may find it confounding that credit scores are on the rise given the financial turmoil many are experiencing. However, in a post on the FICO Blog, author Ethan Dornhelm acknowledges this discrepancy, noting that it typically “takes a few months” for credit scores to reflect financial strains, such as increased card balances or missed payments that may be a symptom of unemployment and other economic factors. In fact, Dornhelm points out that it wasn’t until late 2009 that the average score reached a low point.

It’s also possible that stimulus efforts — including unemployment benefits and direct payments to Americans — have also helped stave off negative financial impact. Unfortunately, it’s unclear if further assistance will arrive any time soon. Although many jobs have returned as parts of the country reopen, the unemployment rate is still well above where it was before the pandemic hit. Recently, Republicans and Democrats have resumed discussions about another possible stimulus package but, as of this writing, nothing solid has come to fruition.

Ultimately, while the new record high in the average FICO score is something worth celebrating, it’s impossible to ignore the greater context this news arrives in. Unintentionally, this update also reaffirms that there is more to personal finance than credit scores alone. Nevertheless, hopefully this skyward trend can continue and more Americans can enjoy the perks of good credit going forward.