The average FICO score among American consumers hit an all-time high in April at 692, up one point from the same time last year and six points higher than the low point of 686 in October 2009. The credit scoring company has been tracking the average consumer FICO score since October 2005, releasing updated averages every 6 months.
As far as FICO scores go, 692 is on the high end of average, as the scale ranges from 300 to 850. Anything between 700 and 749 is generally considered a good score, with the best scores ranging 750 and higher. Since the average bottomed out at 686 in 2009, it has generally trended upward, returning to its pre-recession high of 690 in April 2012.
Anthony Sprauve, senior consumer credit specialist at FICO, said there’s no way to definitively say what drove the improvement, but it’s likely tied to consumers’ better sense of financial responsibility post-recession.
“After the recession, consumers have become better stewards of their financial house; they’re paying more attention to their finances,” Sprauve said. “They’re more educated and more aware, and I also think there are fewer confusing financial products in the marketplace.”
Consumers have become more cautious, he said, lowering their debt levels as a result. Because credit utilization is one of the biggest factors in determining your credit score (how much you use of your available credit), a general reduction in debt likely had a considerable role in the average score improvement.
At the same time, credit availability shrank in the wake of the recession, because subprime lending was one of many things that triggered the downturn. With credit tightened, it makes sense that credit scores would improve, as those who qualified for loan products already had decent credit and had more opportunities to improve upon it, as opposed to consumers with damaged credit. On top of that, the financial crisis prompted consumers to proceed with caution when using credit.
“There was so much press about people mismanaging their credit, not paying close enough attention, not being active stewards of their financial ship,” Sprauve said. “That was a wakeup call for a lot of Americans to change that behavior, to not trust lenders to do the right thing for them, that they need to do the right things for themselves, that they have to take ownership.”
As consumers become more educated about credit and how their credit scores are determined, they gain the insight that helps them make better day-to-day financial decisions. You can get your credit scores in a variety of ways — there are hundreds of credit scoring models out there — and tracking the same score over time will help you see your progress. It doesn’t have to cost anything, either. You can get two of your credit scores for free with updates every 14 days on Credit.com.
More on Credit Reports and Credit Scores:
- The Credit.com Credit Score Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report