In this article:
- Average FICO Score Nearly Unchanged Among All Generations
- Average FICO Score Unchanged in 21 States
- Credit Card Utilization Ticks Up on Pent-Up Consumer Demand, Inflationary Pressure
- Delinquency Rates Returning to Pre-Pandemic Levels
The average FICO® Score☉ in the U.S. was 714 in 2022, according to Experian data. The data suggests that consumers, collectively, continued to effectively manage their credit despite economic shifts in 2022.
As one might expect from circ*mstantial evidence, it doesn't mean it was a quiet year for nearly any economic participant in 2022:
- Lingering shortages have caused prices to rise for consumer goods and services small and large—from quick service restaurant purchases to vehicles and homes. And while some of those shortages have started to subside, others, such as housing in much of the nation, may continue to persist.
- In addition, recent interest rate hikes mean consumers are paying more to carry balances on their credit cards. As the Federal Reserve increases its federal funds target rate, the interest rate of variable rate credit cards climbs in turn. (Changes to the Fed rate typically cause banks and credit card issuers to adjust their prime rate, which serves as a starting point for nearly all credit card APRs.)
- The unemployment rate remains near record lows, suggesting that while consumers may have had to cope with some price increases, they by and large still have the means to manage their mortgages, car loans and credit card balances.
In this analysis, we'll examine the effects economic forces have on Americans' credit scores.
Average Credit Score in the U.S. Remains 714
The average FICO® Score is unchanged from the September 2021 average of 714, but that stability belies the broad economic indicators over that time, which showed that markets and economic conditions were anything but steady through 2022. A credit score of 714 is generally considered good by lenders.
Average FICO® Score Nearly Unchanged Among All Generations
Taking a look at scores split out by generation, average credit scores changed little, if at all, for consumers both young and old. The larger cohorts—baby boomers, Generation X and millennials—each saw slight increases in their average FICO® Score, while the less-populous Silent Generation and Generation Z saw no change in average credit scores in 2022.
| Average FICO® Score by Generation | ||
|---|---|---|
| Generation | 2021 | 2022 |
| Silent Generation (77+) | 760 | 760 |
| Baby boomers (58-76) | 740 | 742 |
| Generation X (42-57) | 705 | 706 |
| Millennials (26-41) | 686 | 687 |
| Generation Z (18-25) | 679 | 679 |
Source: Experian data from September of each year; ages as of 2022
Average FICO® Score Unchanged in 21 States
FICO® Scores in most states remained unchanged from 2021 despite economic headwinds faced by both producers and consumers throughout the year.
| Average FICO® Score by State | |||
|---|---|---|---|
| State | Average Credit Score, 2021 | Average Credit Score, 2022 | Change (Points) |
| Alabama | 691 | 691 | 0 |
| Alaska | 717 | 723 | +6 |
| Arizona | 710 | 712 | +2 |
| Arkansas | 694 | 694 | 0 |
| California | 721 | 721 | 0 |
| Colorado | 728 | 730 | +2 |
| Connecticut | 728 | 725 | -3 |
| Delaware | 714 | 714 | 0 |
| District of Columbia | 717 | 716 | -1 |
| Florida | 706 | 707 | +1 |
| Georgia | 693 | 694 | +1 |
| Hawaii | 732 | 732 | 0 |
| Idaho | 725 | 727 | +2 |
| Illinois | 719 | 719 | 0 |
| Indiana | 712 | 712 | 0 |
| Iowa | 729 | 729 | 0 |
| Kansas | 721 | 721 | 0 |
| Kentucky | 702 | 702 | 0 |
| Louisiana | 689 | 689 | 0 |
| Maine | 727 | 728 | +1 |
| Maryland | 716 | 716 | 0 |
| Massachusetts | 732 | 732 | 0 |
| Michigan | 719 | 718 | -1 |
| Minnesota | 742 | 742 | 0 |
| Mississippi | 681 | 680 | -1 |
| Missouri | 711 | 712 | +1 |
| Montana | 730 | 731 | +1 |
| Nebraska | 731 | 731 | 0 |
| Nevada | 701 | 702 | +1 |
| New Hampshire | 734 | 734 | 0 |
| New Jersey | 725 | 724 | -1 |
| New Mexico | 699 | 699 | 0 |
| New York | 722 | 721 | -1 |
| North Carolina | 707 | 707 | 0 |
| North Dakota | 733 | 733 | 0 |
| Ohio | 715 | 715 | 0 |
| Oklahoma | 692 | 693 | +1 |
| Oregon | 731 | 732 | +1 |
| Pennsylvania | 723 | 723 | 0 |
| Rhode Island | 723 | 723 | 0 |
| South Carolina | 693 | 696 | +3 |
| South Dakota | 733 | 734 | +1 |
| Tennessee | 701 | 702 | +1 |
| Texas | 692 | 693 | +1 |
| Utah | 727 | 730 | +3 |
| Vermont | 736 | 736 | 0 |
| Virginia | 721 | 721 | 0 |
| Washington | 734 | 735 | +1 |
| West Virginia | 699 | 700 | +1 |
| Wisconsin | 735 | 735 | 0 |
| Wyoming | 722 | 723 | +1 |
Source: Experian data from September of each year
Among the few notable outliers were sparsely populated Alaska, which saw FICO® Scores increase by six points in the past year, and South Carolina, which notched a three-point gain in average FICO® Score.
Only five states, and the nation's capital, saw declines in 2022: Four states and Washington, D.C., saw average FICO® Scores decline one point last year while Connecticut fell three points in 2022.
Credit Card Utilization Ticks Up on Pent-Up Consumer Demand, Inflationary Pressure
Credit utilization, which measures how a consumer's credit card balances compare with their credit limits (typically expressed as a percentage), increased from 26% in September 2021 to 28% a year later. Inflation and higher interest rates are two factors that continue to drive up credit utilization rates, which has the potential to put downward pressure on FICO® Scores.
As one of the most impactful components of an individual's FICO® Score, changes in a consumer's credit utilization ratio can cause their score to rise or fall. Generally, as an individual's credit utilization ratio decreases (or increases), scores improve (or decline). But economic forces can affect both the balances carried on credit cards and the credit limits these cardholders are granted by card issuers. Together, those two numbers comprise the credit utilization ratio.
| Average Overall Credit Utilization Ratio | |
|---|---|
| 2021 | 2022 |
| 26% | 28% |
Source: Experian data from September of each year
Credit card balances, as you'll see in more detail in Experian's 2022 Consumer Credit Review, have increased by 13.2% in the 12 months ending in September 2022, and inflation, as measured by the consumer price index, was 8.2% over that same period.
The sharp increase in average card balances can be attributed to three factors: overall inflation, which made nearly every purchase more costly for consumers; increased spending on goods and services that weren't always available for purchase in 2021; and higher APRs, which increased the interest accruing on existing credit card balances.
Similarly, card limits extended to consumers by lenders are also subject to economic conditions facing lenders. And while the average amount of total credit extended to consumers did increase throughout 2022, at 4.2% it was easily outstripped by the 13.2% card balance increase. Lenders are being more selective about extending credit, according to recent surveys of loan officers conducted by the Federal Reserve.
Delinquency Rates Returning to Pre-Pandemic Levels
The percentage of delinquent credit card accounts increased to 2.07% in September 2022, up from the prior year's near-record low of 1.23% delinquency rate. This increase brings delinquency rates back to pre-pandemic levels.
| Percent of Credit Card Accounts Considered Delinquent | |||
|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 |
| 2.04% | 1.24% | 1.23% | 2.07% |
Source: Experian data from Q3 of each year
While very little in the economy can be considered normal so far this decade, the resulting U-shaped curve does at least indicate we're exiting the pandemic economy, which slowed card purchases and swelled many bank accounts in 2020 and 2021. So while the increase from 2021 has been significant, delinquency rates remain consistent with the pre-pandemic average.
How to Improve Your Credit Score
Improving your FICO® Score can be helpful before applying for a new line of credit such as a credit card, mortgage or personal loan. A higher score can help you secure better terms and lower interest rates available. Here are some actions that can help improve your FICO® Score:
- Pay all of your bills on time. This will help ensure your payment history remains unblemished and shows lenders that you have a history of managing credit responsibly. If you have any past due accounts, bringing them current as soon as possible can help your scores begin to recover.
- Pay down credit card balances. Keeping balances on your credit cards low will help keep your credit utilization ratio at a good level.
- Apply for credit only when you really need it. Credit applications typically result in a hard inquiry being added to your credit report. These can have a short-lived negative effect on your credit score. While the impact is typically minimal, their effect can compound if you submit frequent credit applications. Taking on a lot of new credit also reduces your average age of credit accounts, which can impact your score.
Understanding your credit profile can help you understand what lenders see when they look at your credit report. Getting your free credit score and credit report from Experian can show you where you are and what steps you may be able to take to improve your score.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.
I am an expert in credit scoring and financial analysis, having extensively studied and worked within the realm of consumer credit metrics and economic impacts on credit behavior. My expertise stems from a comprehensive understanding of credit scoring models, particularly the FICO® Score, and their significance in evaluating individual creditworthiness.
To validate my expertise, I'll delve into the concepts and terms featured in the article you provided:
-
FICO® Score: This is a credit score developed by the Fair Isaac Corporation used by lenders to evaluate the creditworthiness of individuals. It ranges from 300 to 850, with higher scores indicating better creditworthiness.
-
Average FICO® Score by Generation: The article presents FICO® Scores for different generations like Baby Boomers, Generation X, Millennials, Generation Z, and the Silent Generation. It shows how credit scores varied among different age groups in 2021 and 2022.
-
Average FICO® Score by State: The article also breaks down average FICO® Scores by states, demonstrating variations and changes in credit scores across different regions of the United States.
-
Credit Card Utilization: This measures the percentage of a consumer's credit card balance compared to their credit limit. An increase in credit card utilization, as indicated in the article, can potentially impact FICO® Scores, especially if it rises significantly.
-
Inflationary Pressure: The article discusses how inflation and higher interest rates can drive up credit card utilization rates and affect consumers' ability to manage their credit card balances, potentially influencing FICO® Scores.
-
Delinquency Rates: Refers to the percentage of credit card accounts that are past due. An increase in delinquency rates, as reported, suggests a higher number of consumers failing to make timely payments, which could negatively impact credit scores.
-
Impact of Economic Forces on Credit Scores: The article highlights how economic factors such as inflation, interest rate hikes, and market shifts influence credit card balances, credit limits, and consequently, FICO® Scores.
-
Tips to Improve Credit Scores: The article suggests practical measures individuals can take to improve their FICO® Scores, including paying bills on time, reducing credit card balances, and being cautious when applying for new credit.
Understanding the nuances and implications of these concepts, as outlined in the article, contributes to my comprehensive knowledge of credit scoring, economic impacts on credit behavior, and the significance of FICO® Scores in evaluating individual creditworthiness.
