Try searching for “average credit score” and you are likely to get different answers from every website in 2014. Here’s why…
I just went through the top 10 listings on Google for the above term and it was alarming to see that virtually all of them were citing information that was either (a) incorrect, or (b) misleading.
The problem starts with the scores they are using…
- FICO – This is without a doubt the gold standard of credit scoring. When people talk about credit scores, this is what they are talking about (or at least, intend to be talking about). Unfortunately, FICO is pretty tight-lipped about it and greatly restricts its usage.
- PLUS Score – This is a scoring model developed by Experian, and it’s geared solely toward consumers (it’s not used by creditors). Instead of running on a 300-to-850 scale like FICO, it runs on a 330-to-830 scale.
- VantageScore – This runs on a scale of 500 to 990. It was developed a few years ago by the major credit reporting agencies (Equifax, Experian, and TransUnion) to compete with Fair Isaac’s industry-leading FICO formula. However, VantageScore hasn’t really caught on and lenders use it far less than FICO.
Rather than identifying an average credit score as being a PLUS Score or VantageScore, almost all websites are using these scores interchangeably, without mentioning what type of score their data is using.
Here’s the truth…
What is the average credit score? Well that’s really not even a question you should be asking. Why? Because those with ultra-low scores (due to a bankruptcy, foreclosure, etc) are going to have scores significantly lower — these drag down the average number big time.
If you want a better gauge of where you fit in, then you should be looking at the median credit score. Several years ago, FICO reported the median score as 723, but has been pretty silent on that front since. The median means it’s exactly in the middle: 50 percent of people have a lower score, 50 percent have a higher score. This will give you a much better idea of the credit score average for Americans.
If you want free access your FICO (the real one, not an imitator) you can get it with this card:
And if you have fair or limited credit, try for this other version below. It’s designed for people with fair/average credit:
If you still insist on knowing the current “average” then good luck on finding that out. FICO doesn’t report it.
Average credit score by state?
Ah… so this is where it gets tricky! FICO doesn’t release a state-by-state breakdown of score distribution. So in order to judge their performance, we have to turn to a different scoring model.
As an alternative, let’s use the VantageScore, which Experian reports on each year. The VantageScore is not the same thing as a FICO score — and Experian reports the averages by metro area, rather than state. However, this information is still a good way to measure performance of geographic areas relative to each other.
As of November 2013, Experian’s “State of Credit” data report a national average VantageScore of 681. Remember, Vantage scores run from 500 (worst) to 990 (best). Here’s a list of the metro areas with the best scores, and those with the worst (as of November 2013).
Cities with the best average Vantage scores:
Rochester, Minn. — 716
Mankato, Minn. — 716
Sioux Falls, S.D. — 713
Minneapolis, Minn. — 713
Green Bay, Wis. — 713
Wausau, Wis. — 711
Madison, Wis. – 711
Fargo, N.D. — 711
Cedar Rapids, Iowa — 711
La Crosse, Minn. — 710
Cities with the worst average Vantage scores:
Greenwood, Miss. – 622
Albany, Ga. — 632
Riverside, Calif. — 638
Harlingen, Texas — 640
Laredo, Texas – 641
Jackson, Miss. — 644
Corpus Christi, Texas — 647
Las Vegas, Nev. — 647
Monroe, La. — 648
Shreveport, La. — 648
You probably notice that those cities with the lowest average scores tend to be in the southern half of the country (both the southeast and southwest). Meanwhile, the cities with the best scores are in the northern Midwest. The spread between the lowest- and highest-scoring city is 68 points.
Average credit score by age group?
Last by not least, the brings us to score distribution by age. I think my friends over at Credit Karma have the best data set available for showing average credit score by age. Although it’s not FICO, they use a credit scoring system which correlates closely – TransUnion’s TransRisk model. Like FICO, it runs on a 300 to 850 scale.
The first thing you probably conclude from looking at that is the older you get, the more your score will go up on average. There are a few reasons for this:
- Let’s be honest here… there are many people who screw up their credit during their college/younger years. It’s not until a few years later when they realize how much they messed up and finally start managing it properly (but by this time they’re older).
- Credit scores (FICO and competitors) all take into account the age of your credit history and accounts. The longer the (positive) history, the more it will help your score. This is a reason why adults who have had accounts for decades tend to have higher scores.
- Even if you never had major screw-ups with your credit as an early adult, as you get older, you hopefully start building up a nest egg and paying down debts like your mortgage, student loans, etc. This of course helps your score.
I would like to warn you though that you shouldn’t think you are doing well score-wise, just because you are above average for your age group. Sure the average may be 638 for the 18 to 24 age group but truth be told, you can somewhat easily hit the low 700s in your early 20s if you do things right. Just check the forum and you will see people who are 18, 19 and 20 with FICOs either in the high 600s or low 700s.
By the time you are 25 to 27, in my personal opinion, there is really no excuse for not having an 800 or close to it.
How many cards do you have in 2014?
Without any loans whatsoever, I achieved a high credit score by my mid-20s solely using credit cards. Obviously a mix of cards and loans are ideal, but if you have only one or two loans on your credit report, then I would recommend going heavy on the cards (have five to 10 if you can use them responsibly and stay debt free). At age 25 I had around a dozen cards and a FICO of around 770 to 790.
Looking to get more cards and use the same strategy I did? If you do, I would strongly recommend you only go with no-annual-fee cards. That way you can keep them open for the long haul and won’t have to worry about an annual fee. For cards that are used sparingly, that’s the way to go.
Here are a couple of my favorite no-annual-fee cards in 2014: