Personal Finance

Average FICO credit score hits all-time high

Key Points
  • Americans have good credit ratings. For the first time, the average national FICO score has reached 704.
  • Credit scores, on average, have been steadily rising since the Great Recession.
Credit scores on the rise thanks to changes at credit agencies

When it comes to credit, Americans are scoring well.

For the first time, the average national credit score has reached 704, according to FICO, developer of one of the most commonly used scores by lenders. FICO scores range from 300 to 850.

Your credit score plays a big role in daily life. It can determine the interest rate a consumer is going to pay for credit cards, car loans and mortgages — or whether they will get a loan at all.

Average credit scores most recently bottomed at 686 during the housing crisis about a decade ago, when there was a sharp increase in foreclosures. They have since steadily ticked higher, according to Ethan Dornhelm, vice president for scores and analytics at FICO. Now scores are at an all-time high.

A score of 704 is considered "solidly good," Dornhelm said. "Consumers will be qualifying for most credit that they are hoping to get." A good score generally is above 700, and those over 760 are considered excellent.

More people understand their credit behaviors and scores, and they are checking their scores more often, Dornhelm said. That understanding and awareness helps you manage and maintain good credit.

New standards for public records, which stripped all civil judgments and tax liens from credit reports, also played a role in driving the overall average higher.

On the other hand, credit card balances and delinquencies are steadily creeping up, as well. "As we've gotten further from the Great Recession, lenders are increasingly competing for new card volume, and part of that is loosening their underwriting criteria in order to be more competitive," Dornhelm said.

As the number of credit card accounts in the U.S. rises, the majority of new customers are subprime borrowers, generally meaning those with a credit score of 660 or below.