The National Average FICO® Score Dropped to 717. Here’s Why

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A recent FICO report shows that the national average FICO® Score dropped within a few short months. Keep reading to learn the inside story. [[{“value”:”

In the U.S., your credit matters. If you have poor credit or a low credit score, it can be harder to qualify for some financial products and even impact your ability to get a job or find housing opportunities. It’s wise to make an effort to maintain a good score.

Unfortunately, the average nationwide FICO® Score has dropped. Find out what factors are causing the average credit score to decrease so you can take steps to raise your score.

The average FICO® Score is less than it was in July 2023

A credit score is the number lenders use to determine someone’s creditworthiness. FICO® Score is a credit score brand. In 1989, the Fair Isaac Corporation created the FICO® Score, which continues to be the most popular credit-scoring method that creditors use.

According to a recent report from the FICO, which analyzed October 2023 scoring data, the national average FICO® Score is 717. This is one point lower than the average score of 718 in July 2023.

While not a notable difference, this is the first time the average score has dropped in a decade. Previously, average scores remained steady or increased. According to prior data, the national average score decreased in October 2013 from the previous average of 691 to 690.

It’s worth noting that a 717 FICO® Score isn’t bad. A person with this score is considered to have good credit, but there’s room for improvement. Based on the FICO scoring system, consumers with scores ranging from 740 to 799 have very good credit. Meanwhile, consumers with scores ranging from 800 to 850 have exceptional credit.

Why did FICO® Scores drop?

Let’s take a closer look at what factors have influenced this. Here are two reasons why consumers had lower FICO® Scores in the fall of 2023 compared to the spring of 2023.

Consumers are missing more payments

FICO data shows that consumers have more missed payments on their credit reports. October 2023 data illustrates that over 18% of consumers had a 30-day or worse past-due payment on one or more credit accounts within the last year.

That’s a 4% increase compared to April 2023. Missed credit card payments have increased and are higher than their pre-pandemic levels. Your payment history makes up 35% of your FICO® Score, so staying on top of your bill payments is necessary to maintain a good score.

You should pay off your entire credit card statement balance to avoid expensive credit card interest charges. If you can’t do this, pay at least the minimum payment amount by the due date to avoid late fees and negative marks on your credit report.

Americans have more outstanding debt

Another reason the average score is lower is because Americans have more outstanding debt. Your credit utilization ratio is a percentage of the available credit that you use. This factor makes up 30% of your FICO® Score.

FICO data shows that as of October 2023, the average consumer’s credit utilization was 35%. In April 2023, it was slightly lower, at 34%. Experts recommend keeping this number below 30% for best results. If you use credit cards, ensure you use only a portion of your available credit. Otherwise, your credit score may suffer.

Don’t ignore your credit score

While the national average credit score isn’t something you need to monitor, you should stay up to date on your credit situation. Knowing what your credit report looks like and where your credit score stands will give you the knowledge needed to make informed financial choices.

Visit AnnualCreditReport.com to view your credit report from each of the three credit bureaus for free. Reviewing each credit report at least once a year is an excellent way to stay informed. Your free credit report won’t list your credit score. However, some banks and credit card issuers offer free credit score services built into their mobile apps to give consumers an estimate of their score.

Check to see if your credit card issuer provides a service like this. For additional financial guidance, check out our free personal finance resources.

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