Your Credit vs The Average American…
Americans are by nature a competitive people; we need to know how we compare to our peers on just about everything, including credit scores. It’s great to know that you have a solid credit score per the experts, but how does your number stack up against the average American? Beyond simply stroking your ego, how your credit score measures up against others could potentially play a role if you are in competition with someone for a job, an apartment, or a house.
You need to remember that there are different scoring systems out there to compare. Most people are familiar with FICO, but there are other options. Experian has their PLUS Score, which scores on a 330-830 range, and the Big Three bureaus invented Vantage Score in 2006 as a competitor to FICO, with scores ranging from 300-850. The FICO credit score range is 300-850, and these scores are generally categorized as follows: <620=poor, 620-680=fair, 680-760-good, 760-850=excellent.
Some people might just look at the national average score to compare their own. The average FICO score in the U.S. is 641, which does not really set the bar too high. However, let’s remember that the average includes everyone with a credit score, meaning that folks with the worst credit (people who have gone bankrupt or been foreclosed upon) are going to bring down the national average. Instead of looking at the national average, let’s look at the national median, where half the numbers are higher, and half the numbers are lower. The median FICO score in America is 723, which is obviously another step up in the scoring hierarchy from the average.
As we’ve seen in earlier articles, many factors can influence credit scores. For example, people straight out of college generally haven’t had the time to build up a positive credit history, especially compared to someone who has been using a credit card for 30 years and has paid off a house and two cars. As such, it can be good to know how your credit score compares against people within your own age bracket. According to Experian, the older you are, the higher your score will tend to be; on average, the difference in credit scores between someone aged 19-29 year old and some 66-plus is over 100 points. Credit Karma concurs, with people 18-44 averaging barely over 625, people 45-54 receiving an average score of almost 650, and folks in the 55-plus age range clocking in at just under 700.
Location can also play an important role. States in the southern part of the U.S. tend to score the poorest for FICO average (Mississippi, South Carolina, Louisiana, Alabama, and Arkansas are at the bottom), while Hawaii, Massachusetts, Minnesota, New York and New Jersey are at the top. Experian’s research across all age groups shows their best scores are consistently coming from the upper Midwest (Minnesota, Wisconsin, Iowa, and North Dakota), while worst credit scores are again dominated by southern states (like Texas, Georgia, Mississippi, and Alabama). Even though these are average scores and not median scores, the numbers are still indicative of significant trends.
In summary, it’s not necessarily easy to simply determine how you stack up to other Americans in terms of credit scores. There are several different ways to measure that span scoring systems, looking at average scores versus median scores, and accounting for age and location. In the end, as is often the case when comparing oneself to others, the most important thing is to make sure that you are able to achieve your own personal goals, regardless of others. A little bit of planning, vigilance, and strong self-discipline should generally allow you to get where you want.