Credit Score Statistics: How to Interpret – and Boost – Your FICO Score

If you want to know how Americans are doing financially, take a look at their credit scores. Many are doing great. Many others have a rocky relationship with credit cards. To tell who’s who, just take a look at credit score statistics.

Your credit score plays an enormous role in your daily life. It can determine the interest rate you pay for credit cards, car loans, and mortgages. It can make the difference between moving your family into the house you love and having your mortgage application rejected.

Some potential employers even check applicants’ credit details to get a better picture of how responsible they are. Your credit score range can affect whether you’ll score your dream job or keep waiting tables.

With all this competition for credit, houses, and even jobs, it’s important to understand your own situation and how it compares to the average credit score.

Credit Score Stats – Editor’s Choice

• One in five Americans aged 20-29 don’t know their credit scores. 

• More than 29.8% of Americans have a credit score of 680 or higher.

• 42.5% of America’s youth earning $49,999 or less per year have a credit score of 639 or lower, with only 24.6% reaching a score over 680.

• 51.2% of Americans renting property have no idea they can report rent and utility bill payments to improve their credit scores.

• Nearly one in two people don’t pay off their credit balances each month.

• Only 12% of the US population has a FICO score lower than 550.

• Americans owe more than $1.5 trillion in student debt.

Filling in the Credit Score Blanks

Like your Social Security number (SSN), your FICO score is one of those numbers you just need to know. Those three digits play a huge role in determining your eligibility for loans and the interest rates you pay.

The first thing you should know is that American credit score statistics are, more often than not, compiled by a company called FICO. FICO uses the information in your credit report to create a numerical representation of your creditworthiness.

There’s also VantageScore, a partnership of America’s three major credit bureaus: Equifax, Experian, and TransUnion. VantageScore is FICO’s main competitor. Both companies provide a credible credit score statistics report for every eligible individual.

Lenders and creditors use this information to determine whether your credit score rating means that you’re reliable enough to repay borrowed funds. They then decide whether or not they will approve your application and, if so, what interest rate they will charge. If you have a lower credit score, lenders consider you less likely to repay any loans you take out. You’ll pay a higher interest rate as extra insurance to the lender. However, there are lenders and lending platforms specialized for the individuals with low credit score.

What is considered a good credit score?

The FICO score chart ranges from 300 to 850, with 850 representing the highest score possible. We can sort these into five categories:

• Excellent: 750 and above
• Good: 700-749
• Fair: 650-699
• Poor: 600-649
• Bad: under 600

Ready for some fascinating, timely, super-important credit score statistics?

1. In April 2017, 20.7% of Americans had a FICO score of 800 or above.

(Fico.com)

This data represents a record-high percentage of people who rate over 800. Financial experts attribute this change in credit scores to a lower delinquency rate and the fact that fewer Americans are taking out loans they can’t afford. As a result, fewer people are falling behind on their payments and more are reaching the 800 credit score that was once out of nearly everyone’s reach.

This is a positive change after a decade or so of turbulent times. It’s clear that credit scores are generally rising. Let’s dig a little deeper by examining the credit score statistics distribution in recent years:

(Data taken from the 2nd quarter of each year – Source: Experian)

Average Credit Score by Income

What is a good credit score? The math depends on a simple rule – the higher one’s level of income, the higher the credit score tends to be.

One of the factors FICO includes when determining one’s credit score is the percentage of total available credit an individual is using on a monthly basis. The general rule is that the credit utilization should be kept below 30%, otherwise the credit score will gradually fall. Unfortunately, another rule of life complicates things: the lower one’s income, the larger the need for credit for day-to-day expenditures.

10. In the fourth quarter of 2018, a little over 38% of perfect FICO scores were held by people with an annual income of $75K or less.

(Experian)

This data confirms that your annual income doesn’t play an overwhelmingly large role in determining your credit score. Obviously, having more money can help you pay your bills, but building the highest credit score comes down to paying your bills on time every month and limiting your credit utilization or the total amount of your debt compared with total credit available.

Credit Variations by State

What is an average credit score in America? That’s a surprisingly tough question, because the lowest credit scores in America can be found in the southern states – Tennessee, Arkansas, Louisiana, and Alabama – but even those statistics are not precise. Still it is certain that regional differences account for differences in what is an excellent credit score in different states.

Here is the list of average FICO scores by state:

How Are Credit Scores Calculated?

There are many ways to learn how to manage your resources without sliding into debt. If you understand how your credit score is calculated, you will be empowered to sort out the factors that have the largest impact and go after a FICO score of 800 even though it may seem impossible.

FICO scores are calculated through examination and analysis of data found in your credit file. The score takes into account major factors such as your payment history, age of credit history, and level of credit utilization to produce a number that reflects your creditworthiness. Knowing how the analysis is performed can keep you out of debt and on the good side of credit score statistics.

Here are five types of information in your credit report along with the amount of influence each has on your credit score:

1. Payment History: This is the most important aspect of your credit file. It shows whether you have paid your bills on time. 35%.
2. Amounts Owed (Credit Utilization Ratio): This is the amount of debt you have, including an evaluation of how much of your available revolving credit you use every month. 30%.
3. Length of Credit History: This is an assessment of how long you have had credit accounts open. A longer credit history equates to lower risks. 15%.
4. Recent Activity: How many credit accounts have you opened, how many credit inquiries have hit your account, and how many times have you applied for credit in the past 12 months? 10%.
5. Credit Mix: This factor is based on how many different types of credit accounts you have, including mortgages, credit cards, auto loans, and revolving credit. 10%.

FAQ

What percentage of the population has a credit score over 850?

According to FICO, less than 1% of the population can maintain a credit score of 850.

What percentage of the population has perfect credit score?

Less than 1% of the population has the perfect FICO score of 850. At the moment, over 20% of Americans have a credit score over 700.

What is a perfect credit score in 2019?

According to FICO, consumers who fall between 720 and 850 qualify for lower interest rates and better credit card deals.

How can I quickly raise my credit score?

It takes nine months to 2.5 years for a consumer to bounce back from the impact of lower credit score results.

How can I raise my credit score 100 points?

Financial experts say that the best way is to pay your bills on time. Missing the payment of one monthly bill can lower your credit score by as much as 100 points.

Is 600 a bad credit score?

The FICO credit score scale starts at 300, so a credit score of 600 is considered to be on the poor side.

Is 650 a good credit score?

A 650 FICO score is considered to be in the “fair” range.

What is a good FICO score?

Typically, a good FICO score is considered to be above 670.

How much will my credit score increase if I pay off collections?

If the collection knocked your FICO score down, you can expect that many of the points you’ve lost will be regained.

What credit score do you need to buy a house in 2019?

Loans are available for home buyers at practically every credit score. Down payments and interest rates vary according to creditworthiness.

How long after buying a house does your credit score go up?

If you have a mortgage, this will most likely boost your credit score in the long run, provided you are regular with your payments.

Does paying a mortgage improve credit score?

Yes, a mortgage will boost your credit score, but only if you make your payments as agreed.