Here’s How Far the Average Credit Score Has Climbed (for Now)

The average FICO credit score has risen for the first time in two years.

The latest statistics from Fair Isaac Corp., or FICO, show that the national average FICO credit score reached 718 (out of 850 possible points) in April 2023. That’s 2 points higher than it was a year prior.

The average score in 2022 — 716 — was unchanged from the average score in 2021. So, prior to now, credit scores had been stuck in place for some time.

However, the upward trend might be losing some of its steam. FICO says preliminary figures from July 2023 indicate that the average credit score has not budged recently and remains at 718.

Numerous recent surveys have found that the American public is nervous about the economy’s future, and FICO acknowledges that a trend of climbing credit scores seems strange in such a climate of fear.

However, FICO believes credit scores are rising due to three factors:

• Slowing inflation
• Lower unemployment numbers, as reported by the U.S. Department of Labor Statistics
• The removal of medical collections accounts under $500 from consumer credit reports

Despite the increase in the average credit score, there might be some clouds on the horizon.

FICO notes that missed payments are increasing, with just over 17% of the population having at least one payment during the past year that was 30 or more days late. That is a 14% increase year-over-year.

In addition, 7% of the population had a payment that was 90 days or more late in the past six months, a 24% year-over-year jump.

Still, missed payments on both mortgages and auto loans remain below levels that occurred prior to the COVID-19 pandemic, FICO notes.

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 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” — which 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.”

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