What is the Average Fico Score By State?
A credit score is a 3-digit number that acts as a “snapshot” of your overall credit history and predicted creditworthiness. Lenders reference your credit score as the quickest, easiest way to gauge the overall risk involved in offering you a loan. A high credit score makes it easier to borrow more money on better terms. A low score makes it difficult to borrow at all, and when you do, it means lower limits and higher interest rates.
Average FICO Score By Every State
Sometimes people other than lenders do a “soft check” on your credit. A "soft check" doesn't require your permission or impact your credit the way an actual application for a loan does. These “off-label” uses of your credit score can impact how likely you are to get a job, secure an apartment lease, or qualify for insurance coverage at reasonable rates. None of these are the intended use of credit scores, but they happen.
The average credit score of American consumers has been rising over the past decade. From a consistent 690 in 2007, 2008, and 2009, the average FICO score for Americans with a credit history recently topped 700 and has been hovering around 703 since late 2019.
Credit Score Trends
Experian, one of the “big three” credit reporting agencies, has this to say in their “2019 Consumer Credit Review”:
The average FICO® Score in the United States hit a record high of 703 in 2019, according to Experian data. That's up from 701 in 2018 and up 14 points since 2010. That may seem surprising, but it shouldn't be, as more people are monitoring their credit reports and credit scores using the wide array of available free solutions…
“We've seen the average FICO® Score of the U.S. population steadily increase each year since the Great Recession in the mid-2000s,” says Tom Quinn, vice president of scores at FICO. “The increase is being driven by changes in consumer credit behaviors. For example, the percent of the population with a 30-plus-day past-due payment reported in the last year has decreased by 22% between April 2009 and April 2019, and average credit card utilization has decreased by 28% during the same time period.”
Keep in mind that this is happening WHILE overall debt for the average American is increasing at an otherwise alarming rate. While these two trends might seem to pull against one another, to some extent they’re complimentary. Americans are able to borrow more because their credit is better; their credit is getting better because they’re repaying so many different types of loans – one of the major factors in computing any credit score.
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Today, 59% of Americans have a FICO® Score of 700 or higher—the biggest percentage ever seen at that level. A credit score of 700 or above is generally considered the marker of good credit by many lenders, who often view consumers with credit scores in this range as favorable borrowers. These borrowers may receive a wider variety of credit product offers, at better interest rates, than those with scores below 700. A score of 800 or higher is usually considered excellent.
Which States Have the Highest Average FICO Score?
Here’s how things looked in 2019. (The number is the average FICO score for each of the top ten states.)
Today, 59% of Americans have a FICO® Score of 700 or higher—the biggest percentage ever seen at that level. A credit score of 700 or above is generally considered the marker of good credit by many lenders, who often view consumers with credit scores in this range as favorable borrowers. These borrowers may receive a wider variety of credit product offers, at better interest rates, than those with scores below 700. A score of 800 or higher is usually considered excellent.
Which States Have the Highest Average FICO Score?
Here’s how things looked in 2019. (The number is the average FICO score for each of the top ten states.)
|
State |
The Highest Average FICO Score |
|
|
|
|
Minnesota |
733 |
|
North Dakota |
727 |
|
Vermont |
726 |
|
Wisconsin |
725 |
|
New Hampshire |
724 |
|
Hawaii |
723 |
What do these credit score statistics have in common? Most of them are in the northern part of the U.S., which may suggest historical or cultural factors. Minnesota is a traditionally “blue” state, but both Dakotas are typically “red.” In total, 7 of the top 10 states in terms of average credit score vote Democratic more often than not, but it’s difficult to say whether one characteristic causes the other or both relate to a third. Unemployment is relatively low and the average citizens in these states have a low credit utilization ratio. Their overall debt is slightly lower than the rest of the nation, but mostly they simply pay their bills on time.
One surprise is that credit scores do NOT correlate strongly to income – making more money doesn’t automatically mean you’ll have a higher credit score. Serious poverty makes it hard to build your score, but once a moderate income is reached, it’s behavior – choices – that matter most, not tax brackets.
Which States Have the LOWEST Average FICO Score?
|
State |
The Lowest Average FICO Score |
|
|
|
|
New Mexico |
686 |
|
Arkansas |
683 |
|
Oklahoma |
682 |
|
South Carolina |
681 |
|
Texas |
680 |
|
Louisiana |
677 |
|
Mississippi |
667 |
While New Mexico and Nevada are both “blue” states, the bottom eight are all reliably “red.” Again, it’s hard to know if politics drive credit habits, financial mindsets shape politics, or both stem from other historical or cultural factors. All of the bottom ten are southern states as well; of those in existence at the time of the Civil War, every one was part of the Confederacy.
In good news, most of the scores even of the lowest states are higher than they were last year. The three at the bottom last year and again this year – Mississippi, Louisiana, and Alabama – each saw a two-point increase in average FICO score since 2018.
How Is My Credit Score Computed?
That partly depends on who’s doing the computing. The FICO is the score most people are referring to when they talk about credit scores, but there are several variations – most notably the VantageScore devised by the three major credit bureaus. The systems are similar, but the VantageScore emphasize some factors differently than the FICO and has a few minor quirks of its own. Usually the details aren’t that important; if you have an average FICO score, you almost certainly also have an average credit score according to VantageScore or any other system. If you have a below average FICO score, you probably have a below average credit score no matter who’s computing it. Of course, if you have an ABOVE average FICO score…
You probably get the idea.
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Lenders may have their own modifications when running your credit. For example, if you’re applying to finance an automobile, the lender will usually pull both your credit score and current credit report. If your score is already pretty good, no worries. But let’s say your score is "fair," or bordering on "poor." The lender, however, notes that you’ve previously financed two other vehicles and never missed a payment. Your lower credit score seems to be the result of some legal fees from several years ago and six months you were unemployed before that. Using their internal algorithm, they “bump up” your credit score for purposes of approving you and calculating what sort of terms they can offer you for financing that truck they want to sell you.
History of Fico Score
For now, though, we’ll stick with the basic FICO score, which has been around since the 1950s (although its current version wasn’t finalized until a generation later). Banks were looking for an easier way to determine who qualified for a loan and who didn’t. Traditionally, if you wanted to borrow money – for a house, a car, or anything else – you had to sit down with a loan officer, present any documentation you could scrape together, and essentially “win them over.”
This meant women, minorities, or anyone who didn’t happen to be particularly handsome or well-dressed were far less likely to get approved, although that wasn’t really the bank’s primary concern. Mostly, it was just terribly inefficient and inconsistent. Some loan officers were fairly good at guessing who’d make their payments and who wouldn’t, while other times they’d make horrible calls based on flawed human perception.
Thus, the “credit score” was born. The details have evolved, and there are those variations we discussed earlier, but most alternative “credit scores” are simply slight variations of the FICO.
You Still Haven’t Told Me How My Credit Score Is Computed…
Sorry, I get carried away sometimes. It’s just so fascinating, isn’t it? No? It’s just me, then?
We don’t know the precise mechanisms used internally to compute your FICO credit score, but we do know the credit score elements factored in and the relative importance of each.
35% of your FICO credit score is based on your payment history. Do you pay your bills on time? When you are late, how late ARE you? And how often are you late? If you want to have a better than average FICO score, this part is pretty straightforward: pay your bills on time, every time.
30% of your FICO is determined by your “utilization ratio.” This is the relationship between the total amount of credit you have available and compares it to how much you’re currently using. This consideration is why some financial advisors suggest you keep your cards active and open, even if you pay them off and don’t plan on using them again. It gives you “available credit” you’re not utilizing, meaning you have a better credit score.
15% is based on the length of your credit history. For how many years have you been borrowing and paying stuff back? Your grandparents probably have a higher than average FICO score, while younger Americans usually start off with a lower FICO score simply because they haven’t had time to establish much in the way of a credit history yet.
10% of your FICO considers what’s called your “credit mix.” Lenders feel better if you have a history of borrowing and repaying on a variety of things – a credit card or two, a personal loan you used to buy a new washer and dryer, a few cars over the years, etc. It’s like looking for a range of work experience before hiring someone for a job; the more types of debt you’ve managed successfully, the more likely you are to effectively manage the next – or so the reasoning goes.
The remaining 10% is determined by how many recent efforts you’ve made to open new lines of credit. Normal loans here and there are no problem; sudden flurries of activity just before you’ve come to them makes lenders nervous. Remember, it’s not personal. It’s all about context and the lender’s effort to determine your reliability.
What Do Different FICO Scores Mean?
These credit score factors are stirred together using a top secret and possibly magic formula. The result is a 3-digit number between 300 – 850. These numbers are often divided into general categories for even greater ease of reference:
Scores of 300 to 579 are considered “Very Poor.” You’ll have trouble getting approved for loans on any terms and may have to consider subprime loans in order to begin rebuilding your credit. Thankfully, there are reputable online lenders who specialize in this sort of thing without scorn or shaming. And it just so happens we know some of the best, so whenever you’re ready, we can totally hook you up.
Scores of 580 to 669 are categorized as “Fair.” You may be turned down by traditional lenders or offered less favorable terms than you’d like. You should still be able to secure financing, however, although there may be limits to how much you can borrow. Expect lenders to push for collateral or co-signers.
Scores of 670 to 739 land you in “Good.” You are officially “average” in the most American sense of the word. You have loan options aplenty – you may even be getting more offers in the mail every day than you even bother to open. Don’t let your access to financing almost anywhere make you careless, however, and don’t assume terms must be pretty much the same wherever you go. They’re so very not. As you might have guessed, we’re partial to some of the more competitive and creative online options.
Scores of 740 to 799 count as “Very Good,” and we might as well go ahead and throw in “Excellent” for scores from 800 to 850. Banks and credit unions will tremble and drool a bit whenever you approach, and you can probably heat your home for the winter just by burning the unsolicited offers you receive in the mail on an almost daily basis. As with the other categories, though, don’t get careless. You can afford to be picky.
No matter what your score, it rarely stays the same for long. Every fiscal decision you make nudges it up or down, directly or indirectly. It takes a while to raise a low score, but not always as long as you think. That’s important, because it means you can always improve your score and that the best time to start is always NOW.
It’s also worth remembering that you are not your score. It’s a prediction of creditworthiness, not a mystical evaluation of you as a person. It’s an important number, and there are advantages to having a higher number and headaches that come from a lower one. But in the end it’s still just a number.
Conclusion
You can’t control unemployment in your state or average credit scores in your region. But here’s the good news – when economists and sociologists examine these statistics and try to answer the question of why one state’s average credit score is this while another’s is that, the factors they’re able to identify are all things in your control.
You can keep a low credit utilization ratio. You can use a budget to make sure you pay your bills on time. You can build or rebuild your credit as well as anyone, no matter where you live or how much money you make.
Looking at scores by state is interesting, although it sparks more questions than answers. But your credit score isn’t determined by your state – it’s determined by you. It may not be quick or easy to strengthen it, but it doesn’t have to be as hard as it might sound. And you don’t have to do it alone.
Before you know it, your credit can be in a much better “state.”