By Tony Azzara | American Express Credit Intel Freelance Contributor
7 Min Read | March 5, 2021 in Credit Score
Factors like your age, state, and income level don’t actually affect your credit score.
Yet there are correlations between average credit score and age, state, and how much you make.
For example, the older the age group, the higher the average credit score. Credit score averages tend to rise with income levels, too.
The average FICO credit score for Americans rose to 711 as of July 2020,1 a number that’s been steadily rising since the Great Recession.2 By most lending standards, 711 is considered a “good” credit score. And anyone at any age, location, or income level can build a good – or even excellent – credit score. Yet not all age groups, states, or income levels tend to have the same average scores.
So when, where, and why do credit scores tend to flourish? Let’s explore average FICO credit scores by age, state, and income level to find out.
In a way, FICO does pay attention to age when it comes to calculating your credit score, but not the way you might expect. The average length of your credit history is what matters, not how many times you’ve revolved around the sun. In other words, your age is generally not a great indicator of credit score, and it’s entirely possible for a young person to have a high score and an older person to have a low score.
Still, average credit scores tend to increase with age. In 2019, when the national average credit score was 703, those in their twenties averaged 662, while those 60 and up had an average credit score of 749. To better understand what these numbers mean, read “Credit Score Ranges: What is an Excellent, Good, or Poor Credit Score?”
Average Credit Score by Age, Second Quarter 20193
|Age||Average FICO Score|
If age isn’t factored into credit score, why the upward trend? For one, we have to earn our credit scores, which takes time. A younger person is more likely to have a lower credit score than an older person simply because they have shorter payment and credit histories than their older counterparts. Consider how age plays a role in relation to the five variables used to calculate a FICO score and their relative weighting in FICO’s scoring model:
All of the above add up to boost your credit score over time, given you are consistently paying off debts – which leads us to another reason why average credit scores tend to increase with age: financial responsibility. As people get older, they generally mature and become more responsible with their money. Plus, the more time that passes, the more time you have to recover from credit mistakes. Many negative credit items will stop affecting your credit score within seven years – as long as you maintain good credit habits.
According to FICO data from April 2019 – when the average U.S. FICO score was 706 – 31 states and Washington, D.C., had average credit scores that ranked higher than the national average. The same data found states in the Midwest and New England generally had the highest average credit scores.
10 States with Highest Average Credit Scores4
|State||Average FICO Score|
Meanwhile, a WalletHub analysis found the average credit score in the South hovered around 667 – which also happened to be the average credit score for Mississippi residents, the state with the lowest average credit score.5
Since where you live is never considered when calculating your credit score, why some states have higher average credit scores than others comes down to other common characteristics that can influence scores, according to several experts interviewed in the WalletHub analysis. Factors like demographics, unemployment rates, poverty levels, education, and income can all contribute to one’s ability to build a high credit score.
Your income isn’t factored into your credit score calculation, either, but the WalletHub analysis found the higher the income level, the higher the average credit score. That corroborated a 2018 Federal Reserve study that found how much you earn may have a “moderate correlation” to your credit score. However, the highest average credit scores seem to overlap with middle-, not just upper-, income levels. In fact, roughly 38% of people with perfect FICO credit scores of 850 had an estimated average income of $75,000 a year or less, according to 2018 data from Experian. For reference, the U.S. median income was $64,324 that year.8
Average Credit Score by Income9
|Annual Income||Average FICO Score|
|$50,000 - $74,999||737|
|$30,001 - $49,999||643|
|$30,000 or less||590|
Like age and location, income bears no direct impact on your credit score, but the two factors still seem to be related. Why? One possible reason is that lower income may result in a lower ability to pay debts consistently, while higher income may result in a stronger payment history. Of course, this varies according to personal expenses and total levels of debt. But someone with a $100,000 salary may be more able to pay back $15,000 in credit card debt than someone with a $30,000 salary.
Credit utilization ratio also plays a factor here. Credit card issuers might look at your income when determining your credit limit, so the higher your income, the more likely you’ll be approved for a higher credit limit. When you have a high credit limit, it can be easier to keep your credit utilization ratio under 30%, which can positively affect your credit score.
Still, it’s important to remember that despite the correlation between average credit score and income, you don’t need to earn a lot in order to build an excellent credit score. Financial responsibility takes precedence. So as long as you spend mindfully – and always pay your bills on time – you are more likely to establish and maintain great credit.
Average credit scores tend to vary by age, state, and income, yet none of these factors are used to help calculate your credit score. Age and income, however, can indirectly affect your ability to satisfy the five factors used to determine your credit score. Meanwhile, demographic information like education level and average income can impact average credit scores from state to state. All things considered, with good financial practices, anyone can build an excellent credit score, regardless of their age, salary, or where they live.
3 “What Is the Average Credit Score in the U.S.?,” Experian
5 “What Is the Average Credit Score in America?,” WalletHub
6 “Are Income and Credit Scores Highly Correlated?,” U.S. Federal Reserve
8 “Income and Poverty in the United States: 2019,” U.S. Census Bureau
9 “How does age of credit history affect credit scores?,” Credit Karma