Average U.S. FICO® Score stays at 717 even as consumers are faced with economic uncertainty

FICO consistently provides insight into the national average FICO® Score to serve as a benchmark metric of U.S. consumers' credit health. As the independent, reliable measure of US consumer credit risk, FICO Scores set the standard for lenders to make accurate and objective credit risk decisions and help more people gain fair credit access. Credit access is defined as the ability of borrowers to obtain home loans, auto loans, lines of credit, and other forms of financial services from lenders.

FICO® Scores are dynamic three-digit numbers ranging from 300-850, which evolve as changes in borrower behavior is reflected in the data maintained by the three primary U.S. consumer reporting agencies (CRAs), Equifax, TransUnion, and Experian. This year's national average FICO Score stands at 717. This is one point lower than a year ago and the same as when we last reported on it earlier this year. This trend is driven by continued increases in missed borrower payments and consumer debt levels, as the lingering uncertainty in the economy, high interest rates, and rising consumer prices continue to put a financial strain on the U.S. credit ecosystem, blunting upward momentum in the aggregate FICO Score.

After the onset of the COVID-19 pandemic and the ensuing roll-out of government stimulus programs and payment accommodations offered by lenders to mitigate the impact of the pandemic-related income loss the national average FICO® Score rose substantially. In the first year of the pandemic, this increase in the average FICO Score was most notable for people with FICO Scores between 550 and 699 - those who were more likely to receive the aforementioned combination of steps taken by both the government and private sector. For example, as shown in Figure 3, consumers with FICO Scores between 600 and 649 saw an increase of 16 points to their average score from April 2020 to April 2021. In contrast, the average FICO Score by the same FICO Score band went down from April 2023 to April 2024. Those consumers with FICO Scores between 600 and 649 as of April 2023 saw a decrease of 5 points to their average credit score within the year - well below the 3-point increase observed during the pre-pandemic period of April 2019 to April 2020.

Let's dive into some of the key factors impacting average credit scores, including overall consumer credit files and credit health, in a bit more depth:

• Missed payments continue to rise: As of April 2024, just over 18% of the population have had a 30-day or worse past-due payment on one or more credit accounts in the last year. This is up by 5% compared to April 2023 and by 1% compared to October 2023. The percentage of the population with more serious delinquencies has continued to rise. As of April 2024, almost 8% of the population has had a 90+ day past-due missed payment in the past six months. This is up by 9% compared to both April 2023 and October 2023.

  While missed payments on mortgages and auto loans have increased in frequency, they are still below pre-pandemic levels. Missed payments on bankcards, however, have grown to the point that they are now higher than pre-pandemic levels. Faced with ongoing economic uncertainty, rising interest rates, and elevated consumer prices, people continue to heavily rely on credit cards for everyday expenses. This can weigh on people - especially those who are already financially distressed - and lead to higher credit card utilization and subsequent defaults on credit card payments. Paying bills on time can have a significant and positive impact on the FICO® Score with the "Payment History" category generally representing 35% of the overall FICO Score calculation.

• Consumer debt continues to trend higher than pre-pandemic levels: As of April 2024, the average credit card utilization grew to 35%. This is up by 3% compared to April 2023 and virtually unchanged from October 2023.

  Based on the latest data from the Federal Reserve Bank of New York, credit card balances hit $1.14 trillion in the second quarter of this year --- an increase of 5.8% compared to a year ago. Even though inflation seems to be moving towards the Federal Reserve's target rate of 2%, higher interest rates, and consumer prices are putting borrowers, especially those with limited cash flow under pressure to carry increased levels of debt. Keeping balances low on credit cards can generate a substantial and positive impact on the FICO® Score. The "Amounts Owed" category which is heavily weighted toward credit card balances and utilization generally represents 30% of the overall FICO Score ingredients.

• New credit activity continues to slow down: As of April 2024, 44% of the population has opened at least one new credit account in the past year. This is down from 45.5% as of April 2023 and from 44.4% as of October 2023. This year-over-year decrease could partially be driven by the continued decline in mortgage origination volumes in the same period. The latest Federal Reserve report illustrates that mortgage origination volumes were at $374 billion in Q2 of 2024 -- a decrease of 4.9% compared to a year ago and still well below the trillion dollar quarterly origination volumes witnessed between 2020 and 2021.

  While auto loan and lease origination volumes were largely unchanged between Q4 of 2023 and Q1 of 2024, they were down by roughly 8% compared to Q2 and Q3 of 2023 -- a trend that likely contributed to the year-over-year decrease in new credit activity. The "New Credit" category generally represents 10% of the FICO® Score calculation, where less frequent credit-seeking behavior tends to be viewed favorably. This deceleration in credit-seeking behavior over the past year has, to a certain extent, offset the effects of increases in borrower delinquency and debt.

This credit score data shows ongoing increases in default rates and re-leveraging of borrower debt. While these credit trends were significant enough to cause the national average FICO® Score to drop by one point in October 2023 and with the metric holding steady at 717 since then, they don't seem to be substantial enough, in aggregate, to materially move the national FICO Score distribution downwards.

However, millions of people are currently facing financial distress. A closer look at non-prime borrowers, those borrowers with late payments and/or collections accounts in their credit files, shows that for this segment of the credit population, both payment default and debt levels have been increasing at a higher rate than the trends observed on the total FICO® Score population and are now well over pre-pandemic levels.

So where does the average FICO® Score go from here? Several factors can answer that question: Will 'inflation fatigue' and a cooling job market put more pressure on people, especially those with few financial lifelines, and lead to more missed payments and increased debt levels, resulting in a material downward shift in the national FICO Score distribution? Or will the Federal Reserve's interest rate decisions lead to further reduction of inflation and the stabilization of the job market and in return help alleviate some of the financial challenges that consumers are facing today?

Regardless of this uncertainty, FICO will continue to research these credit score trends and remains committed to helping lenders better understand the credit risk that each borrower represents and make better-informed lending decisions. FICO is also committed, through portals such as myFICO.com and programs such as Score a Better Future and FICO® Score Open Access, to educate and empower consumers, helping them manage their credit health and achieve their financial goals. We continue to invest heavily in safe and responsible financial inclusion by offering alternative data-driven solutions such as FICO® Score XD and the UltraFICO® Score to provide millions of borrowers with an onramp to mainstream credit access.

To learn more about FICO® Scores, check out these resources:

How is FICO helping with financial inclusion?

The FICO® Score is Built to Last

FICO® Scores vs. Credit Scores

A World Without FICO Credit Scores: What Was It Like?

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