Average Credit Score Falls for the First Time in Years

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Unhappy man holding a credit card
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The average FICO credit score has fallen for the first time in a decade.

The latest statistics from Fair Isaac Corp., or FICO, show that the national average FICO credit score fell to 717 (out of 850 possible points) in October 2023. That’s one point lower than it was earlier last year.

The last time FICO scores fell nationwide was in 2013, when the score also slipped one point (from 691 to 690).

The folks at FICO emphasize that FICO scores are considered lagging economic indicators, and that the slippage in scores suggests that a combination of inflation and higher interest rates is beginning to have a negative impact on consumers.

Missed borrower payments and higher consumer debt levels appear to be leading factors in the FICO score decline.

As of October 2023, about 18% of the population had experienced a 30-day or worse past-due payment on at least one credit account during the previous year. In April 2023, just 4% of consumers were in that position.

Consumer debt was also higher in October. The average credit utilization — or the amount of credit that an individual is using at a given time as a percentage of the total amount of credit available to that person — stood at 35% in October 2023. That was up from 34% in October 2019, which was shortly before the COVID-19 pandemic started.

As of last October, credit card balances in the U.S. had topped $1 trillion, or about $3,100 per person.

How to improve your own FICO credit score

The first step in improving your credit score is knowing where it stands. If you haven’t checked your FICO score recently, read “7 Ways to Get Your FICO Credit Score for Free.”

To improve any credit score, it also helps to understand how the score is computed.

The most commonly used FICO credit scores are heavily influenced by two factors:

  • Payment history, which accounts for 35% of these scores
  • Amounts owed, which accounts for 30%

No other factor accounts for more than 10% or 15% of FICO credit scores.

Payment history

Perhaps the most important element of payment history is whether your credit payments have been made on time. Such payments include those for:

  • Credit cards, including retail store credit cards
  • Installment loans, such as car loans
  • Mortgages

Even one late payment can negatively affect you in various ways. On the other hand, a good track record of timely payments will help increase your FICO score.

Amounts owed

“Amounts owed” refers to the amount of outstanding balances on installment loans and revolving accounts such as credit cards.

In the context of revolving accounts, “amounts owed” is sometimes also referred to as “credit utilization ratio.” As we mentioned above, that is a ratio of how much credit is available to you compared with how much of it you are using at a given time.

The weight given to amounts owed is why we often say that you generally should not close accounts of credit cards you are no longer using. From “7 Surprising Things That Damage Your Credit Score“:

“Closing a credit card account you’re not using decreases your available credit, however. That increases your credit utilization ratio, hurting your credit score.”

Another tactic is to pay off your credit card more often, so that your outstanding balance doesn’t get as big, which keeps your credit utilization ratio lower.

For more ways to improve your credit score, check out “7 Ways to Boost Your Credit Score Fast.”

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