Average U.S. FICO Score at 717 as More Consumers Face Financial Headwinds

Late last year, we reported that after a 2-point increase from the year prior, the national average FICO® Score held steady from April 2023 to July 2023 at 718.

The latest credit score data is in and as of October 2023, the national average FICO® Score now stands at 717. This is one point lower than it was earlier in 2023 and reflects the first time the metric has decreased in a decade as shown in Figure 1. Given that the FICO Score is a lagging, not leading, economic indicator, this suggests that the effects of high interest rates and persistent inflation may be starting to weigh on consumers, especially those already struggling to manage their finances. 

Figure 1. Having stabilized earlier in the year, the national average FICO® Score decreased by one-point in late 2023. 

The data indicates that the one-point drop in the average FICO® Score during this period is driven by increases in missed borrower payments and consumer debt levels. Let’s dive into some of the key trends impacting average credit scores, including overall consumer credit files and credit health, in a bit more depth:

• Missed payments continue to rise: As of October 2023, just over 18% of the population have had a 30-day or worse past-due payment on one or more credit accounts in the last year. This is up by 4% compared to April 2023. 

  While missed payments on mortgages and auto loans have gone up, they are still below their pre-pandemic levels. Missed payments on bankcards have increased, and now exceed their pre-pandemic levels. The apparent cumulative impact of higher interest rates, elevated consumer prices and economic uncertainty has put a financial strain especially on those consumers who heavily rely on credit cards to cover everyday expenses. This can lead to higher credit card utilization and subsequent defaults on credit card payments. Paying bills on time can have a significant and positive impact on the FICO® Score with the “Payment History” category representing 35% of the overall FICO Score calculation.        

• Consumer debt is higher than pre-pandemic levels: As of October 2023, the average credit utilization was at 35%. This is up not only from 34% as of April 2023, but also from 33% as of April 2020 and from 34% as of October 2019 (which can be viewed as a seasonally adjusted pre-pandemic benchmark).Credit card balances exceeded $1 trillion (about $3,100 per person in the US) last fall and increased by another $50 billion (about $150 per person in the US) in Q4 of 2023, based on the latest fed from the Federal Reserve Bank of New York. Data from the Federal Reserve also indicates that revolving credit, which can be viewed as a proxy for credit cards, increased at an annual rate of 17.7% in November 2023. Persistent inflation and increases in the cost of securing and carrying debt appears to be causing consumers, especially those with limited cashflow, to carry increased levels of debt. Keeping balances low on credit cards can have a substantial and positive impact on the FICO® Score. In fact, the “Amounts Owed” category which is heavily weighted towards credit card balances and utilization represents 30% of the overall FICO Score calculation.   

• New credit activity slows down: As of October 2023, 44.4% of the population has opened at least one new credit account in the past year. This is down not only from 45.5% as of April 2023, but also from 47.3% as of April 2020 and 47.2% as of October 2019. This decrease from April to October in 2023 was likely driven by the continued decline in mortgage origination volumes in the same period. The latest report from the Federal Reserve illustrates that mortgage origination volumes were at $394 billion in Q4 of 2023 -- a modest increase from the previous quarter, but still well below the trillion dollar quarterly origination volumes witnessed between 2020 and 2021.

  While auto loan and lease origination volumes were largely unchanged between April and October in 2023, aggregate credit limits increased by 2.5% in the same period suggesting that consumers were obtaining more credit either by securing higher limits on their existing credit cards or by opening new credit card accounts. This trend indicates an offset by the decline in mortgage origination volumes with fewer borrowers obtaining credit between April and October in 2023. The “New Credit” category represents 10% of the FICO® Score calculation, and this deceleration in credit seeking behavior over the past year can, to a certain extent, offset the effects of increases in consumer delinquency and debt levels. 

Figure 2. FICO® Score population has continued to degrade in key metrics between April and October 2023.

Our latest credit score data provides evidence of persistent increases in default rates and re-leveraging of consumer debt. While these emerging score trends do not seem to be substantial enough in aggregate to materially move the national FICO® Score distribution downwards, they were significant enough to cause the national average FICO Score to drop by one point in late 2023. Whether this average score drop is an anomaly, or an early warning of an inflection point in consumer repayment behavior will depend on a few factors: will high inflation and elevated consumer prices continue to place financial stress on borrowers and lead to more missed payments and increased debt levels, resulting in a downward shift in the national FICO® Score distribution, or will the Federal Reserve’s interest rate decisions and the outlook of the jobs market throughout the new year help alleviate the economic uncertainty which consumers are facing today?

FICO will continue reporting on these score trends and is committed to helping lenders better understand the credit risk that each borrower represents and make better-informed lending decisions. Through portals such as myFICO.com and programs such as Score a Better Future and FICO® Score Open Access, we will continue to educate and empower consumers. We continue to invest heavily in safe and responsible financial inclusion by offering alternative data-driven solutions such as FICO® Score XD and the UltraFICO™ Score to provide millions of consumers with an onramp to mainstream credit.

To learn more about FICO® Scores, check out these resources:

How is FICO helping with financial inclusion?

The FICO® Score is Built to Last

FICO® Scores vs. Credit Scores