The latest data from FICO, the leading data analytics firm responsible for credit scoring models in 90% of lending decisions, reveals a dip in the average credit score for the first time since 2013. In October 2023, the average FICO score stood at 717, a minor decline from the record high of 718 in April of the same year. Despite this decrease, a FICO score of 717 is still classified as “good” (ranging from 670 to 739), offering individuals access to better interest rates and credit card offers.
Several factors have been cited for the slight drop in credit scores, including high interest rates and persistent inflation, leading to missed payments and increased debt levels among consumers. The on-time payment history represents a significant portion of an individual’s overall FICO score calculation. Furthermore, a Federal Reserve Bank of New York report highlighted a substantial increase in credit card debt to $1.13 trillion, which can impact credit scores negatively. However, positive economic indicators like the strong job market and efforts to remove medical debt have helped prevent a more significant decline in credit scores.
For individuals looking to improve their credit scores, there are practical steps to take, such as paying bills on time and in full, requesting credit limit increases, and utilizing services like Experian Boost™ that link on-time utility payments to credit reports. These strategies, along with accessing credit cards with potential rewards and benefits, can help individuals enhance their credit scores and financial health.
