National Average FICO Score Is Still 716 | Credit Cards

The national average FICO credit score did not increase between April 2021 and April 2022, according to new data from FICO. Though the average score remains solidly in the good range at 716, this marks the first time since October 2012 that the average FICO score has not risen year over year and comes after a sharp increase in the first year of the COVID-19 pandemic.

This development is not cause for concern, says Can Arkali, senior director of scores and predictive analytics at FICO. With the average score at 716, “it is evident that consumers have become more aware of their credit health,” he says.

There are multiple reasons that the national average FICO score stayed the same, and there are still plenty of steps consumers can take to improve their own credit scores.

Why the Average FICO Score Did Not Increase

Small changes in consumer behaviors that influence FICO scores help explain the situation. “While still below pre-pandemic levels, both missed payments and consumer debt have increased slightly, and more consumers have been obtaining new credit at near pre-pandemic levels, which are all important drivers of the FICO score,” Arkali says.

The percent of the population with a missed payment that was at least 30 days late at some point in the year increased by just over 1% year over year. Missed payments are significant, since payment history makes up 35% of a consumer’s FICO score.

Average credit card utilization increased by 5% between April 2021 and April 2022, although it remained below April 2020 levels.

At the same time, average credit card balances increased by just over 7% year over year, according to FICO. Amounts owed make up 30% of the FICO score, and consumers with credit utilization ratios above 30% are likely to see lower scores.

This increased usage could be dangerous in the current rising interest rate environment. “The cost to borrow money is now higher,” says John Bergquist, managing member of Lift Financial. “This means payments on debt will be larger.”

More consumers are also opening new credit year over year. New credit makes up 10% of the FICO score calculation, and too many hard credit inquiries will bring down your credit score.

Bergquist tells consumers to pull back on borrowing given rates will likely continue to rise. “Inflation is also extremely high,” he says. “This means Americans are paying more for everyday items, leaving them with less money to pay down debt.”

How Did the First Year of the Pandemic Affect Credit Scores?

The first year of the pandemic saw a “significant uptick” in the average FICO score, Arkali says. The national average score increased from 708 to 713 between April and October of 2020.

“The combination of government stimulus programs such as the CARES Act and payment accommodation programs offered by lenders enabled millions of consumers to take a breath and pay down debt on time, which is a factor that is rewarded by the FICO score,” he says.

How to Improve Your Credit Score Today

The advice on how to improve your credit score hasn’t changed: “For a good FICO score, keep your debt levels low and pay your debt on time,” Arkali says. This applies to all types of credit, including installment loans and credit cards.

As new credit card accounts have increased among consumers, they should remember that new credit also is a factor in a credit score and consider how they are paying their monthly credit card bills, Arkali says.

“When it comes to paying down credit card debt, prioritizing paying off credit cards that are closest to being maxed out may benefit consumers more than spreading equal payments across several credit cards,” Arkali says.

You’ll also want to consider factors such as how closing a credit card would affect your credit. “You should also keep lines of credit open, as closing credit lines will have a negative impact on your credit score,” Bergquist says.

For its part, FICO provides resources including Score a Better Future, a program that aims to improve financial literacy with education and credit counseling.

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