Home » Average US credit score FALLS for the first time in a decade thanks to steep prices and record-high interest rates

Average US credit score FALLS for the first time in a decade thanks to steep prices and record-high interest rates

by Marko Florentino
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  • Average US credit rating fell from 718 to 717 last year – the first fall since 2013
  • In the wake of the pandemic, Americans have fallen deeper into debt

American credit scores are falling for the first time in over a decade. 

The national average credit score fell to 717 from a record high of 718 at the beginning of last year, according to a new report from FICO.

Over the last ten years, every time the average score was reported it either increased or remained steady – rising from 690 in October 2013 to 718 last April.

But in the wake of the pandemic Americans have found themselves deeper in debt, as increasing prices paired with record high interest rates strained their budgets.

The overall drop in creditworthiness was caused by a mixture of missed payments and higher credit utilization, according to the report.

The national average credit score fell to 717 from a record high of 718 at the beginning of last year

The national average credit score fell to 717 from a record high of 718 at the beginning of last year

According to the credit scoring company, anything below 629 is considered 'bad', while anything above 720 is 'excellent'

According to the credit scoring company, anything below 629 is considered ‘bad’, while anything above 720 is ‘excellent’ 

US credit card debt reached to a record high of $1.1 trillion in December, according to the New York Federal Reserve.

‘Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,’ said Wilbert van der Klaauw, economic research advisor at the New York Fed.

FICO is a company that produces scores that gauge a person’s credit – or how likely they are to pay back a loan on time.

If you fail to pay off credit card debt on time or miss a mortgage payment, the lender may report that to ratings agencies and your rating will be downgraded.

According to the credit scoring company, anything below 629 is considered ‘bad’, while anything above 720 is ‘excellent.’

Generally, Americans’ credit scores have been increasing fairly steadily since around 2010, when the average rating was 687. In October 2019 it was 796.

Then the pandemic then caused ratings to surge, as federal aid helped Americans keep afloat and avoid defaulting on their loans.

Also contributing to those rising rates was that information like medical debt was erased from credit reports.

According to the New York Fed, America's combined household debt increased by $212 billion to a record $17.5 trillion in the fourth quarter of 2023

According to the New York Fed, America’s combined household debt increased by $212 billion to a record $17.5 trillion in the fourth quarter of 2023

The central bank has indicated that it could begin to cut interest rates later this year, but it is not clear exactly when. Pictured is Fed Chair Jerome Powell

The central bank has indicated that it could begin to cut interest rates later this year, but it is not clear exactly when. Pictured is Fed Chair Jerome Powell

But in the wake of the pandemic, consumers started experiencing financial strain.

‘The re-opening of the economy, ramping down of government stimulus programs and the return of payment accommodations to their pre-pandemic levels impacted consumer behavior,’ read the FICO report.

In October, the average credit card utilization was 35 percent, up from 34 percent earlier in the year. Credit utilization is the percentage of their credit limit a person is using.

The biggest increase was in the number of Americans that were more than 30 days past due on paying off a real estate loan – 3.9 percent as opposed to 3.6 percent.

Missed payments on bankcards were also up and now slightly surpass their pre-pandemic levels – with 11.2 percent having been more than 30 days past due within the last year.

Overall consumer debt has also surpassed pre-pandemic levels. According to the New York Fed, America’s combined household debt increased by $212 billion to a record $17.5 trillion in the fourth quarter of 2023.



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