Average FICO Credit Score Reaches New Highs During Pandemic
The pandemic has wreaked havoc in businesses, financial markets, travel and social life, schools and more in recent months. But when it comes to credit cards, there’s some good news. Debt has been decreasing and now the average U.S. FICO® Score has increased to 711 on average. This is 5 points higher than the average score just a year ago.
There are several reason for increased credit scores, and any negative impact due to COVID-19 and economic worries, might take a few months to show up in consumers’ credit reports. For example, during the Great Recession, the average national FICO® Score didn’t hit its lowest point until late 2009, well after the recession was underway. In the case of the COVID-19 pandemic, the lag between the onset of the pandemic and when credit files begin to show the financial strain that millions of Americans are feeling is further affected by the significant steps taken by both the government (stimulus spending) and private sector (lender payment accommodations), the FICO blog post notes.
Here are some of the things that have helped credit score rise in recent months:
- As of July 2020, just 7.3% of the population had a 90+ day past due missed payment in the past 6 months. This is down from 8.1% pre-COVID (Jan 2020). Missed payments have a big effect on credit scores.
- As of July 2020, U.S. consumers had on average $6,004 in credit card debt, down from an average of $6,934 back in January 2020. Credit utilization is the ratio of your outstanding credit card balances to your credit card limits. It measures the amount of available credit you are using and it makes up 30% of the FICO® Score calculation.
- Millions of consumers have accounts that have been reported in some form of payment accommodation in recent months. These accounts are reported as “current” instead of as “delinquent”, thus insuring that the FICO® Score won’t be impacted by late payments related to the effects of the COVID-19 pandemic.