Credit Union Borrowers Use and Seek Credit More Than National Bank Borrowers
Credit union lenders need to be mindful of balancing opportunity and risk with their credit decisions
Credit Union Borrowers Show Higher Credit Activity
In a previous blog, we shared the average FICO® Score for credit union borrowers has slightly decreased in each of the last two years due to higher levels of delinquencies and growing debt levels over time.
As we further explore the credit union customer population, the FICO Analytics team has found credit union borrowers use credit more than national bank borrowers, in the form of higher debt levels, searches for new credit, and greater likelihood to have an open auto loan, mortgage, personal loan, or student loan. These findings provide credit union lenders with deeper credit decision insights and opportunities to safely grow their lending portfolios. This also means that lenders need to be aware of emerging credit risks.
Evaluating data from January 2025, we found that 23% of the FICO scorable population has at least one open credit account at a credit union in their credit history, while 88% have at least one open account at a national bank. The average FICO® Score for the credit union population was 724, two points lower than the average credit score for the national bank population (726), as seen in Figure 1.
Figure 1: Average and median credit scores as of January 2025
Meanwhile, the median credit score for credit union borrowers was 747, which is 9 points lower than national bank borrowers, who had a median score of 756. Credit union borrowers are more likely to have credit scores in the middle of the score range than national bank borrowers. As seen in Figure 2, we found that 44% of credit union borrowers have a credit score of 550-749, while only 40% of national bank borrowers have a credit score in this range.
Figure 2: Score distributions as of January 2025
Missed Payments Higher Among Credit Union Members
Digging further, we see in Figure 3 that those with a credit union account have higher rates of missed payments compared to their national bank counterparts. The percentage of credit union borrowers with a missed payment in the last year is 20.0%, which is higher than the corresponding percentage for national bank borrowers of 17.6%, a relative difference of 14%.
Paying bills on time can positively impact the FICO® Score. The “Payment History” category represents roughly 35% of the FICO® Score calculation. Late payments could have a negative credit score impact.
Figure 3. Credit metrics for credit union and national bank populations
Credit Union Borrowers More Likely to Open New Accounts
Additionally, credit union borrowers have higher debt levels than national bank borrowers. Average credit card balances were $10,293 for those with a credit union account vs. $8,278 for those with a national bank account, a 24% relative difference. Similarly, credit card utilization was 39% for credit union borrowers compared to 36% for national bank borrowers.
Maintaining low balances on credit cards can have a positive impact on the FICO® Score because the “Amounts Owed” category represents roughly 30% of the overall credit score calculation.
Additionally, we see that credit union borrowers are more likely to open new accounts; 54.0% of those with a credit union account opened a new account in the last year while 44.9% of those with a national bank account initiated a new credit obligation in the last year, a 20% relative difference.
Those who refrain from opening new credit accounts can maintain or improve their standing in the “New Credit” category, which represents about 10% of the FICO® Score calculation.
Finally, we see in Figure 4 that credit union borrowers have more credit accounts on average than national bank borrowers with 19 credit accounts on average for credit union borrowers and 15 accounts on average for national bank borrowers. This may be partly driven by the fact that 85% of credit union borrowers also have an open national bank account, while only 23% of national bank borrowers have an open credit union account. On the other hand, the increased usage of credit accounts for credit union borrowers extends to a variety of different types of credit, including auto loans, mortgages, personal loans, and student loans.
Figure 4: Credit mix for credit union and national bank borrowers
Credit union borrowers have higher credit card utilization rates, higher account opening rates, and a broader mix of credit types. This demonstrates that credit union borrowers are generally more likely to utilize credit than their national bank counterparts. Additionally, they are more likely to fall into the middle of the credit score distribution. Ultimately, credit union lenders have both an increased opportunity because the population is more credit hungry and willing to take on new credit than the national bank population but also exhibit increased risk in the form of higher delinquency rates. We encourage credit union lenders to craft their strategies based on their credit risk/reward appetite.
FICO’s Role in Empowering Smarter Credit Decisions
Leveraging advanced analytics, FICO is dedicated to helping lenders gain deeper insights into the credit risk that each borrower represents, enabling them to make more informed lending decisions. Through platforms such as myFICO.com where consumers may check their credit score and initiatives like Score A Better Future and FICO® Score Open Access, we strive to educate and empower consumers. Our commitment to responsible financial inclusion is reflected in our significant investments in alternative, data-driven solutions such as UltraFICO® Score and FICO® Score XD to provide millions of people with a pathway to mainstream credit access.
If you have more questions, please visit these helpful resources:
Lenders and borrowers can explore how credit union members manage financial obligations like mortgage and payment behavior, and how these factors influence their FICO® Score. Learn more by reading, “The Perfect Credit Score: Understanding the 850 FICO Score”, and our eBook “Understanding Your FICO® Scores” which also explains how different types of credit—such as credit union loans—can impact your score, as well as the latest average FICO Score in the US.
Whether you're comparing money-saving strategies, evaluating fee structures, or considering your next mortgage or credit option, staying informed is key myFICO.com explains what is a FICO® Score and why it's important to stay informed
You can also learn about your credit report, how to get a copy, and your rights around credit union and national bank reporting through USAGov
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<p>FICO’s latest research on <a href="http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-rising-the-beat-goes-on/" target="_blank">national FICO® Score distribution</a> shows that US credit quality continues to trend upwards, with an increasing number of consumers scoring in the highest scores ranges. Given that, we decided it was time to refresh our study on “<a href="http://www.fico.com/en/blogs/risk-compliance/infographic-what-does-a-high-credit-scorer-look-like/" target="_blank">FICO® Score high achievers</a>,” where we examine the credit behavioural profiles of consumers with higher credit scores.</p> <p>As expected, our latest study showed that older people generally have higher scores, as has been the case in our <a href="http://www.fico.com/en/blogs/risk-compliance/age-before-beauty-credit-worthiness-before-youth/" target="_blank">past research</a>. This is largely because they have trade lines that have been open longer, which leads to higher scores (assuming the trade lines are in good standing and all other things equal). The most credit savvy among you will remember that length of credit history accounts for roughly 15% of the overall <a href="http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx" target="_blank">FICO® Score calculation</a>.</p> <p>But for younger consumers, it isn’t too helpful to say, “just wait until you are 50 years old, and that will fix things!” Thus, I decided to dive deeper with our analysis, including looking at the credit behavioural characteristics of younger consumers with high FICO® Scores.</p> <p>In this analysis, I looked at credit characteristics for the two highest score bands, 750-799 and 800-850, which have about 16% and 23% of the population, respectively. I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO<strong>®</strong> Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score.</p> <p><a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a></p> <p>Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li><strong>Credit history.</strong> Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li><strong>New credit.</strong> High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li><strong>Pay on time.</strong> As you might expect, the further in the past the delinquency, the higher the score – and that’s <u>if</u> a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li><strong>Balance and utilization.</strong> Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of <u>available</u> revolving credit utilized. The 800+ group is roughly 1/4 of the national median, both in total and on their highest utilized card; they also have lower balances and more cards<em>. </em>The 750-799 group is more active and higher utilized, but still only at 2/3 of the national figures. The young 750-799 group compensate with lower revolving balances and, as a result, lower utilization, which is in line with what we see for the 800+ group.</li> <li><strong>Benchmarks.</strong> I’d like to point out that while this study provides good benchmarks of the typical credit traits of the FICO® Score high achiever, individual credit profiles will vary widely. And keep in mind that when we sort groups of consumers as a whole by different behaviours, some results may look superficially odd. For example, the 800+ band has a longer median average open account time (128 months) than average revolving months on file (140 months).</li> </ul> So, what do we conclude? A huge takeaway is that high scorers don’t have too much in the way of serious delinquencies and negative public record data.</p> <p>In most respects, the young 800+ people are like their peer group. They really only differ markedly in their shorter credit history and higher non-mortgage balance, both of which are a function of life stage. Our results show that you don’t have to be a credit product hermit; these high scorers have more credit cards. The takeaway is to start credit activity early and maintain well-managed and moderate usage.</p> <p>In many ways, the young 750-799 people are more interesting because their age profile is much younger. Their credit characteristics differ more from their peer group, particularly in terms of length of credit history. They compensate by having almost pristine credit records and lower balances.</p> <p>Ultimately, 39% of US consumers are FICO® Score high achievers, which they accomplish by following common-sense credit practices. It ain’t rocket science!</p>
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