Contributing Writer at Tally
March 13, 2020
Your credit score becomes more important as you approach critical financial moments in your life, like buying your first home, financing a new family car or trying to get approved for credit to pay for the kids’ braces.
Reaching these financial milestones can translate to higher scores as you age, but there are several other factors that may affect your average credit score. But before we dive into the average credit score by age, let's get a firm understanding of the leading credit scoring models and how they compare to one another.
There are many credit scoring models, but the two main models used today are FICO and VantageScore. Here's how they are alike and what sets them apart from one another.
Your FICO credit score is the one you hear about the most. In fact, it has become so common, lenders sometimes mistakenly use "FICO" to describe all credit scores — even if they use a different scoring model.
FICO — originally named Fair, Isaac and Company — is a data analytics company that calculates Americans’ FICO scores. The FICO score is now used by more than 90% of leading lenders in the U.S. There are multiple scoring systems within the FICO model, including scores for specific industries like automotive, credit cards and mortgages.
The FICO scoring model has been through a number of changes since debuting in 1989. The latest model is FICO Score 9. Currently, FICO base scoring ranges from 300-850. Industry-specific scores range from 250-900.
Each of the three major credit bureaus — Transunion, Equifax and Experian — offers its own FICO score, which may result in slight variations in your score. This is why many lenders look at all three scores and use the median score to determine your creditworthiness.
For example, let's say you have a 650 FICO score from Transunion, a 685 score from Equifax and a 705 from Experian. A lender that uses the median score would make its credit decision based on your 685 score from Equifax.
Ultimately, the creditor determines if a credit score is "good" or "bad." But the base FICO Score 9 model lays it out like this:
579 or lower: Poor
740-799: Very good
800 or higher: Exceptional
The FICO scoring model weighs different factors and the effect they have on your credit report. The factors and the weight they carry on your FICO score are as follows:
Payment history: 35%
Total debt: 30%
Length of credit history: 15%
New credit: 10%
Credit mix: 10%
Much like the FICO scoring model, the VantageScore model has gone through many changes over the years. However, there are some notable differences.
The VantageScore model doesn't include industry-specific scoring systems. It also only provides one score based on your credit reports, rather than a unique score for each credit bureau.
The VantageScore system uses the same scoring range as FICO: 300 to 850 points. But VantageScore makes a different determination on whether a credit score is "good" or "bad." Here’s the breakdown:
Very poor: 300-499
Similar to the FICO scoring model, VantageScore model also weighs various factors to determine your final score — but it doesn't disclose the weight that each factor has. In order of most important to least important:
Total credit usage
Balance and available credit
Credit history age
Your credit score may be something you want to keep private, but it never hurts to know where you stand among your age group. Understanding the average credit score by age can give you an idea of how you're managing your personal finances, compared to your peers.
In 2019, Experian determined the average credit scores of folks ages 20-60. Unsurprisingly, older populations tend to have higher credit scores, however, the difference between them and those in their 20's is not incredibly dramatic.
Although it's not the highest score out there, a score in the high 600's is average as you're still building up your credit in your 20's and typically don't have the extensive history as older people.
People over the age of 60 had the highest average score of 749 as they have had decades to build up their credit history and typically are more consistent with payments and are more conservative with spending.
To summarize, the average FICO credit score by age is as follows:
Wondering why credit scores vary so much based on age groups? A lot of it has to do with longevity and life milestones.
In your 20s, you're typically building a credit profile from scratch, which means your credit age is very young. Your average credit age may be just a year or two old. And every time you open a new credit card or take on new debt, it lowers your credit's average age.
In your 30s, your credit score may increase because you’ve had a decade or more to establish a good payment history and average credit age. At this point, you’ve also likely established a mixture of different types of debt, like credit cards, car loans and maybe even a mortgage. All of these things help improve your credit.
As you continue moving through the years, the average age of your credit continues to rise, and the account mix improves. In your 40s through 50s, you are in your prime earning years, so your income has likely improved significantly. Higher income can lead to higher credit limits, which lowers your utilization rate and increases your credit score.
By the time you reach your 60s, you’re nearing or already heading into retirement and have reduced your debt in preparation for living on a fixed income. The law is also on your side: The Equal Credit Opportunity prohibits creditors from discouraging you from applying for credit due to age. In fact, the ECOA allows the credit scoring models to favor certain age groups, which happens to be those over 62 years old.
The average credit score is directly correlated to income, according to research insights from ValuePenguin. To determine the average credit score by income, they looked at the income brackets and research from the Minneapolis Federal Reserve Bank.
People in the low-income bracket — earning less than 50% of the median family income — have an average credit score of 664. Moderate income earners — earning 50-75% of the MFI — have an average score of 716. Middle-income folks — earning 80-119% of MFI — have an average credit score of 753. Upper-income individuals who earn more than 120% of the MFI have an average credit score of 775.
To summarize, the average credit score by income is as follows:
Low income: 664
Moderate income: 716
Middle income: 753
Upper income: 775
Age and income aren't the only variables when it comes to credit scores. As Experian’s data demonstrates, the state you live in can also have an impact.
The lowest-ranking state on Experian's list is Mississippi, where residents have an average FICO credit score of 667. Meanwhile, the state with the highest average credit score is Minnesota at a whopping 733.
If your credit score is lower than others in your age group, don't fret. Your credit score can vary widely from month to month. Plus, getting your score at or above that average mark can be relatively simple by following a few credit score tips.
It's not all about constantly increasing your score, either. You want to maintain a good credit score by avoiding mistakes that can significantly lower your score.
Good credit builds a solid financial base, but it’s just one aspect of a healthy credit profile. If you want to go deeper into your financial health, compare your current retirement savings to the average 401(k) balance by age.