What is a Good FICO Credit Score and What are the Averages for Age and State?
What’s a good credit score? Those four seemingly innocuous words can send a chill down anyone’s spine. It’s a number that many Americans know by heart, a number they check regularly, and one that brings them more jubilation and misery than the one they see in their bank account every day.
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But your credit score means nothing if you don’t have anything to compare it against. Is it good, is it bad; are you below average, above average; do you need to make drastic improvements or are you on the right course?
These are the questions we’ll help you answer in this guide, as we look at what constitutes a good credit score and discover what the average is for your location and age.
The FICO Scoring System
The FICO score was created by Fair, Isaac, and Company. It gathers user data relating to payment histories, credit accounts, late payments, credit card balances and more, and uses this to calculate a score. This is then shown to lenders, from credit card issuers checking to see whether you’re capable of meeting your monthly payment, to landlords, and employers.
There have been many versions of the FICO Score as the creators seek to improve it and account for the latest credit trends. However, there are really only two versions that you need to concern yourself with as a borrower:
- Base FICO
- Industry-Specific FICO
The Base FICO is what many people mean when they refer to your credit score and it’s calculated based on your credit report, accounting for credit card information, loan data, and everything else. The second is tailored forwards specific industries and may be used by credit card companies, home loan providers, and auto loan companies.
In any case, both these scores relate to your credit report, which in turn is based on your credit history. If you focus on meeting payments, not opening too many accounts, keeping limits high and debt low, then you’ll improve both these scores simultaneously.
For more advice, check with our guide to improving your credit score fast.
Credit Score Range
There are two ranges to consider here. The first concerns the score and determines whether it is Poor, Fair, Good, Very Good, or Exceptional, the second concerns how this score is calculated:
- Under 579 = Poor
- 580 to 669 = Fair
- 670 to 739 – Good
- 740 to 799 = Very Good
- 800 or More = Exceptional
- Payment History = 35% – Whether you meet monthly payments and stay up to date with bills.
- Credit Utilization = 30% – How much debt you have accumulated compared with how much credit you have available.
- Account Age = 15% – The age of your accounts, with older accounts generating a higher score.
- Variety of Credit = 10% – How varied is your credit? Do you have an auto loan and home loan mixed in with all those cards, or do you just have stacks of credit card debt?
- New Accounts = 10% – Hard inquiries and newly opened accounts.
Average Credit Score in the United States
Although the US debt problem is growing, passing $14 trillion in 2019 and amassing more credit card, personal loan, and student loan debt than ever before, the average credit score is improving. It’s a contradiction, but a happy one nonetheless and it suggests that consumers are becoming better informed and more capable.
In the final quarter of 2019, the average credit score was between 703 and 706, which is considered “Good” and is only 54 to 57 points from “Excellent”.
However, this doesn’t paint a complete picture. The average credit score changes depending on who you ask, how they’re getting their information and which scoring system they are using.
The average credit scores also change from state to state and from age to age, both of which we’ll cover in this guide.
The Average Credit Score by State
Minnesota, the Gopher State, has the highest average score across the US, coming in at 733 based on 2019 figures. This is a very slight improvement from the previous year and when you look at additional data, it’s not much of a surprise.
Minnesota has the third-lowest poverty rate in the country and the 11th highest household income. One of the few surprises is that Minnesota is a relatively young state, and we know that individuals above 75 are the least likely to have large amounts of debt. However, if that statistic had any significance then the oldest state, Florida, wouldn’t have one of the worst average scores (694).
Washington is often said to be one of the richest states by average household income and this is reflected in an average credit score of 724. Other high average states include:
- North Dakota (727)
- South Dakota (727)
- Vermont (726)
- Wisconsin (725)
- New Hampshire (724)
- Hawaii (723)
- Nebraska (723)
- Iowa (720)
On the flip side, the states with the lowest average credit score include:
- Mississippi (667)
- Louisiana (677)
- Alabama (680)
- Texas (680)
- South Carolina (681)
- Georgia (682)
- Oklahoma (682)
- Arkansas (683)
- Nevada (686)
- New Mexico (686)
This information was provided by Experian, one of the three major credit bureaus tasked with recording America’s debt.
What are Good Credit Scores for People in Their Twenties and Thirties?
The average credit score for someone in their 20s is 662, which you’ll recognize as being just short of “Good”. It’s not a bad credit score but combined with the individual’s age and the fact their payment history, debt-to-income ratio, and credit utilization ratio are likely to be low, it can become a problem.
So, what’s the issue here? Well, many young adults are burdened with student loan debt before they have a chance to build good credit. This student loan debt can hit their credit report hard, and if they follow it with a credit card, an auto loan, and even a personal loan, their score begins to suffer.
It doesn’t get much better for individuals in their thirties, as the average credit score for this age range is 673. Generally speaking, debt is quite low for people below 35, coming in at just $67,400 when compared to $133,100 for those aged 35-44.
But this accounts for the fact that someone in their thirties and forties is more likely to have a home loan and an auto loan, increasing the average quite significantly.
What are Good Credit Scores for People Over 40?
The older you get, the better your credit score becomes. The average score increases to 684 for individuals in their forties, 706 for those in their 50s, and an impressive 749 for those aged 60+.
- Aged 20 to 29: 662
- Aged 30 to 39: 673
- Aged 40 to 49: 684
- Aged 50 to 59: 706
- Aged 60+: 749
That may not sound like enough to increase the average across the whole country, especially when you consider that the average doesn’t even climb above 700 until aged 50. However, the US has an aging population, as do many developed nations, and there are currently close to 70 million people aged 60 or more.
Americans in their forties and fifties have the highest debt, with those aged 45 to 54 suffering more than any other age bracket. However, they also have better credit scores than anyone younger than them, suggesting this debt is more likely to be tied-up in home loans and other secured debts as opposed to credit cards and student loans.
Why Does Debt Decrease with Age?
Debt decreases with age for several reasons. Firstly, individuals aged 60 or over have lived through easier times, when unemployment was lower, opportunities were greater, and wages were higher. They bought their homes sooner and were less reliant on credit.
The main reason is that they are retiring now, their mortgages have been cleared or are close to clearing, and they have the experience of age and all the perks that come with it (more likely to have collected an inheritance or receive a windfall; more likely to have accumulated savings or investments).
It’s worth noting, however, that three-quarters of citizens die with some form of debt, so this is an issue that hangs over most Americans, albeit one that lessens with age.
What’s Considered a Good Credit Score for Getting Credit Cards?
A good score will make it easier to acquire a new credit card and will also allow you to improve your credit limit with relative ease. Many credit card companies will only look at borrowers with scores of 700 or higher, others will drop to the mid-600s.
If you are sub-650, or even sub-700, spend some time trying to improve your credit score as it could make a massive difference with regards to the rates you’re offered. If that’s out of the question, look into acquiring a secured credit card, whereby you only spend the cash that you add to the card.
What’s Considered a Good Credit Score for Buying or Renting?
You should be able to buy a house with a credit score of 600 or above. However, anything less than 660 is likely to have a significant impact on the rate you’re offered, while anything above 700 will greatly improve your interest rate.
Landlords maybe a little more receptive to low scores, but it depends on the total monthly cost, the type of house you’re renting, and your payment history. In either case, you won’t need a perfect score to get a great deal and can generally get the best rates with anything in or above the Very Good range.
How Can a Good Credit Score Save you Money?
If you improve your credit score from Poor to Very good, you will see a massive difference. Lenders that would otherwise reject you will now offer you premium rates and many more doors will be opened for you. You’ll also receive more credit card offers in the mail and may receive an automatic credit limit boost on your existing cards.
The biggest changes occur when you improve your credit score from the lowest ranks and edge towards those middling and high scores. This far down the scale, even an increase of 30 points can make a massive difference in terms of what you’re accepted for. Many lenders use automated systems to quickly vet applicants. If you fall below the range they consider acceptable, you’ll be rejected, even if you’re making great improvements and have a solid payment history.
You’re unlikely to see much of a difference when you go from Very Good to Excellent, but it can still provide you with more opportunities and will ensure that no one turns you away.
How Can a Bad Credit Score Affect Your Life and Finances?
A bad credit score can take away your safety net and reduce your opportunities.
If you have a good score and very little debt, you know that if things turn ugly, you’ll always have loans, credit cards, and installment plans to fall back on. You also know that once you can afford the down payment, you can buy a house or a brand-new car.
These options are simply not available to you if you have bad credit. It can feel like your life is on pause because you’re not able to do the things that your peers might be doing.
There is no easy or quick fix for this but if you focus on changing your spending habits and taking a few of our hints on board (we have countless articles on debt management and budgeting) then it will improve in time.
I Have a Good Credit Report, why is my Score Bad?
All the information used to calculate your score is listed on your credit report, but if you’re seeing things that don’t necessarily synchronize, such as a low score that is connected to a clean account, then it may be the result of one of the following:
- Low credit limits
- Limited payment history
- Existing accounts are new
Summary: The Average Credit Score
To summarize, the average credit score falls between 703 and 706, but it differs greatly depending on age and location. What doesn’t change, however, is how lenders judge what constitutes a Good or Bad credit score. This is what you need to focus on. Stop comparing yourself to your peers and concentrate on increasing your score until you get to a range that is comfortable, secure, and provides you with the opportunities you need.