The Average Credit Score is On the Rise — Here’s Why

Earlier this year, the average credit score in America reached a major milestone. According to the Fair Isaacs Corporation (better known a FICO) the average credit score now sits at 700. While that’s still 150 points lower than a perfect score, it’s still a solidly good score overall — even classified as “very good” by some standards. Beyond that the number of “super prime” consumers with credit scores over 800 has been steadily rising since the start of the decade, with those holding scores over 800 now outnumbering those with scores under 600.

So what’s behind this peak credit moment? There are at least a few circumstances at play:

Availability of information

As Bloomberg notes, one major contributing factor is transparency. In addition to free educational score sites like Credit Karma, more and more credit card issuers are now including their customers’ credit scores on their monthly statements. While these snapshots may be slightly misleading due to the various ways that actual creditors use your scores to make decisions, the newfound availability of credit information has made it easier for consumers to not only understand their credit but improve it as well.

Finance automation

Of course there are plenty of other factors that are also aiding the average credit score. For example the popularity and availbilty of automatic bill pay and/or payment reminders have helped curb late payments and delinquencies. Similarly many third party sites and apps now offer additional reminders for users, allowing them to keep a closer watch on their finances without exerting much energy.

Recession recovery

While the Great Recession and the banking crisis may seem far in the rear view mirror for some, it’s been a long hard crawl for others, as our slowly growing economy reflects. During that crisis, especially as home foreclosures grew, the average credit score bottomed out at 686. Nearly eight years later the increase of this average shows that things are improving, although credit card balances have been slowing creeping higher.

Credit score obsession

Finally there seems to now be a small subset of the population that has become consumed with achieving a perfect credit score. This phenomenon was actually recently chronicled by Bloomberg, with credit expert John Ulzheimer explaining, “We’ve all been raised using a grading and evaluation system from school through work. You want to do as good as possible, and as good as possible in the credit scoring world is 850.” The site suggests that some competitive adults are gamifying their finances in striving for that elite perfect score, which only 1.4% of Americans have. Although it’s unlikely that these perfect credit seekers are really having that large of an effect on the overall trend, it does stand to reason that other Americans are also taking an interest in imporving their scores not just because of the perks good credit provides but because of the competitive aspect of the whole thing. For those interested in achieving higher credit scores, Upgrade recently published a guide on understanding your credit score that is worth a read.

Despite some concerning figures, such as an uptick in credit card balances and delinquencies, the average credit score hitting 700 is quite an accomplishment. Behind that milestone are a number of factors, not the least of which is a growing knowledge of the credit system among everyday Americans. Whether thanks to education score sites, various finance apps, or even credit score gamification, it’s clear that the world of credit is no longer the mystery that it once was — and that’s certainly for the better.

Also published on Medium.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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