Average Credit Score by State

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Average Credit Score by State

Economic situations might differ greatly across states. It’s impossible to acquire a thorough picture of a certain location without considering all of the important aspects. When it comes to credit scores, knowing the average may assist inhabitants of a state understand how they compare to their neighbors—and make it easier for people thinking about moving to that state to learn more about how they’d fit in economically. It may also be used to evaluate commercial potential inside a state.

Key Takeaways

  • In 2021, the national average FICO score was 714. This signifies a four-point gain over 2020 and the fourth consecutive year increase. 1
  • Minnesota had the highest average FICO score in 2021, followed by Vermont, Wisconsin, New Hampshire, Washington, and North Dakota. 1
  • Mississippi had the lowest average FICO score in 2021, followed by Louisiana, Alabama, Oklahoma, Texas, and Georgia. 1
  • According to the Federal Reserve Board of Governors, there is a modest link between family income and consumer credit ratings. 2
  • Although average credit card debt does not clearly correspond with average credit scores, it is a helpful metric for assessing a consumer’s specific financial conditions within a certain state. 1

Understanding Credit Scores

A credit score, in its most basic form, is a three-digit number that financial organizations may use to gauge an individual’s creditworthiness, and it is normally updated monthly. Your credit score is calculated using information from your three credit reports, such as total debt and the number of late payments. The maximum credit score is 850, while the lowest is 300.3.

A better credit score, according to lenders, indicates that a borrower is more likely to repay their loans. It may effect not just whether you qualify for insurance or a loan, but it can also affect how much you pay overall. Lenders offer higher interest rates and surcharges to persons with lower credit scores to reflect for the greater risk to lenders. 3

To fix a negative credit score and/or keep your present one healthy, pay off debt, make regular payments, and keep credit account balances at zero.

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Credit scores, rather than having a particular number, fall into one of five different ranges, providing an easy reference for an individual’s financial health. For example, someone with a credit score of 800 or above, termed “Exceptional,” will find it considerably simpler to apply for a loan. 4

Anyone seeking a loan with a credit score of 669 or below, generally known as a subprime borrower, may end up paying more than others, if they are accepted at all. 4

FICO Score Ranges
850–800Exceptional
799–740Very Good
739–670Good
669–580Fair
579–300Very Poor

Keep in mind that creditors may set their own ranges, thus a person can potentially have more than one credit score. The aforementioned ranges, however, are the most often used because to the market dominance of the FICO score model. 4

Why FICO?

A FICO score is a credit score developed by the Fair Isaac Corporation (FICO) in 1989. 56 FICO scores are the best number for gauging the financial health of a certain location since they contribute into more than 90% of credit decisions made in the United States. 7

When establishing creditworthiness, FICO scores examine payment history, current amount of indebtedness, categories of credit utilized, duration of credit history, and new credit accounts. This provides some explanations for why particular states’ credit ratings are lower or better than those of their neighbors. 8

According to our analysis, the national average FICO Score in 2021 will be 714. This signifies a four-point improvement over 2020 and the fourth consecutive year that scores have increased. 1

It should be noted that FICO is not the only name in the game. VantageScore is a consumer credit rating product developed in 2006 by the main three credit bureaus as an alternative to the FICO score. 9 FICO, although claiming to be more accurate than other models because to its sophisticated algorithms and machine learning approaches, is a better fit for the purposes of this article due to its broad acceptability. 10

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State-by-State Breakdown

FICO scores

Minnesota had the highest average FICO score in 2021, followed by Vermont, Wisconsin, New Hampshire, Washington, and North Dakota. Maine, Mississippi, and Nevada increased the most from 2020, each by six points, while 12 states grew by five points. 1

Notably, in 2020, the majority of states with the highest average credit score gains were quite close to the current national average. Furthermore, with the exception of Minnesota, which is two points above the “Very Good” level, even the states with the highest average credit ratings are still in the “Good” group. 1

Your credit score has a direct influence on how much you may pay for any loans you take out, including interest rates and any charges.

Mississippi has the lowest average FICO score of any state. Louisiana was the second lowest, followed by other nearby states such as Alabama, Oklahoma, Texas, and Georgia. Surprisingly, Oklahoma and South Dakota, both high-scoring states, rose the least from 2020, by two points apiece. Following these two were 11 states that increased by just three points, the bulk of which began with scores higher than 720.1.

On a more positive note, no state has an average credit score that falls below the “Good” category, albeit this does not imply that a state’s average citizens are financially secure. 1

FICO and household income

According to the Federal Reserve Board of Governors, there was a modest association between family income and consumer credit ratings in 2018. This would imply that growing economic inequality might exacerbate differences in credit availability. 11 It’s no surprise that credit ratings are worse in the southern United States. 1 According to the United States Census Bureau, 75% of the top eight poorest states in the country are in the South. 12

Mississippi is notable in this aspect; as of 2019, the Magnolia State has both the lowest median income and the greatest poverty rate in the United States1312.

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FICO and credit card debt

Average credit card debt is another metric that may be used to approximate a consumer’s specific financial conditions within a given state, albeit it does not reliably connect with average credit scores, while offering insight into how much debt a typical person carries.

Which State Has the Highest Average Credit Score?

Minnesota has the highest average FICO score in 2021, according to Experian, at 742. Vermont, Wisconsin, New Hampshire, Washington, and North Dakota were close behind. 1

What Is the Average Credit Score in the United States?

According to Experian, the average FICO Score in the United States in 2021 will be 714. This was a four-point increase over the previous year and the fourth straight year of gain. 1

What Is a Good Credit Score?

Anything from 739 and 670 is considered a “Good” FICO Score. The other four FICO Score levels are:4

  • Exceptional: 850 to 800
  • Very Good: 799 to 740
  • Fair: 669 to 580
  • Very Poor: 579 to 300

The Bottom Line

It’s important to remember that the economic circumstances of the state in which you live do not inevitably impact your credit score; it’s your duty. Averages are computed by summing all of the values in a particular dataset and then dividing by the number of numbers. While the majority of the results may be pretty close to each other, outliers may occur.

To end up on the upper end of the credit score range, keep paying off your obligations, prevent late payments, and keep as low a balance as possible on any credit accounts you may have.

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