Contributing Writer at Tally
September 4, 2020
Monitoring your credit score can be both rewarding and frustrating.
Maintaining a good score can help you qualify for loans and credit cards with the best terms — it can even help you get approved for that apartment you’ve been eyeing. But the seemingly random increases and decreases may make you feel like you have no control over your score.
Instead of worrying about the small changes, try comparing your credit score to others in your region. This can help you determine how you stack up financially among people similar to you, like those in the same age group or those who live in the same state.
Below, we’ll take a closer look at the average credit score by state, as well as what goes into a credit score and how to increase yours.
Each year, Experian performs its Consumer Credit Review. This report reviews credit scores nationwide and pulls out key details, including:
Average credit card balance
Average mortgage balance
Average student loan debt
Average FICO Score in the U.S.
Average FICO Score by age
Average FICO Score by metro area
Average FICO Score by state
In the 2019 Consumer Credit Review, Experian found the national average FICO Score reached an all-time high of 703 in the U.S. — a 14-point increase since 2010. The report attributes this increase to more consumers monitoring their credit through free credit monitoring tools.
In its state-by-state review, Experian found Minnesota had the highest average credit score of 733. Meanwhile, Mississippi had the lowest average credit score of 667.
The full list of average credit score by state is as follows:
District of Columbia: 703
New Hampshire: 724
New Jersey: 714
New Mexico: 686
New York: 712
North Carolina: 694
North Dakota: 727
Rhode Island: 713
South Carolina: 681
South Dakota: 727
West Virginia: 687
Knowing the average credit score by state provides context about your financial health in relation to others in your area and the country. But your geographic location has no impact on your credit score.
You don’t need to worry if you live in a state with a low average, such as Mississippi or Texas. Conversely, living in a state with a high average, like Wisconsin or Minnesota, doesn’t automatically give you a high score.
Regardless of the average credit score in your state, understanding your FICO Score and why it's the most significant credit score to monitor will help you maintain solid personal finances.
You may find dozens of credit scoring models, each with its own algorithm to determine your credit score. Common credit scoring models include:
Most lenders use FICO Scores to determine if you qualify for a loan or credit card.
The FICO Score model has more than 30 variations, including multiple base FICO Scores and industry-specific scores. Still, 90% of companies use the FICO Score 8 model when qualifying someone for a loan or credit card.
Because of its widespread use, the term "credit score" generally refers to your FICO Score 8.
Your FICO Score can range from 300 to 850. Within this credit score range, FICO has five credit rating categories:
Poor: Less than 580
Very Good: 740-799
Exceptional: 800 or higher
Your credit score is determined by a complex calculation of your credit report’s information from each of the three major credit bureaus: Experian, Equifax and Transunion.
FICO looks at five primary categories within your credit reports and weighs them to determine your FICO Score. Because each credit bureau may have different information, your FICO Score can vary among them.
The five categories and their weights are as follows:
Payment history (35%): This category examines whether you've made on-time payments or late payments to your creditors. Payments that are late 30 days or more can negatively impact your FICO Score.
Amounts owed (30%): This category reviews how much debt you owe but is primarily concerned with your credit utilization rate. A credit utilization rate over 30% may negatively impact your FICO Score.
Length of credit history (15%): This category focuses on several time-based factors on your credit report, including the average age of all your credit accounts, the age of your newest account, the age of your oldest account and how long it's been since you used specific credit accounts. The older your average credit account is, the more positively it impacts your FICO Score.
Credit mix (10%):
This category audits your mixture of credit accounts, including credit cards, retail accounts, installment loans, finance company accounts and mortgages. If you have several account types on your credit report, it can impact your credit score positively.
New credit (10%): This category analyzes three items: how many new accounts you have, how long it's been since you opened a new account and the number of hard credit inquiries you have. If you open (or apply for) multiple new accounts in a short amount of time, it may negatively impact your FICO Score.
The math that FICO does to combine these weighted categories and calculate your credit score is not public. However, managing your credit to these weighted averages may help improve your FICO Score.
Checking your credit doesn't count as a hard credit inquiry and won't lower your credit score. Some options are free, while others have a fee.
Most sites that offer free access to your credit score from the three major credit bureaus don’t provide your FICO Score. Instead, they offer an estimated score based on the site’s review of your credit report from each credit bureau. While they aren't always accurate representations of your FICO Score, these free options give a rough estimate and let you see if your score is rising or falling.
Experian also offers a free credit score service. Unlike other free services, it discloses your FICO Score. However, the free option is limited to your Experian credit report. It doesn’t include your FICO Score based on your Transunion and Equifax reports.
Some credit cards offer free FICO Score monitoring as a perk. Generally, you can see your FICO Score, but it's not always from all three credit bureaus.
FICO has a credit score website, MyFICO. For a fee, you can access your FICO Score from all three major credit bureaus.
A high FICO Score indicates financial responsibility. It shows you have a favorable credit report, which can help you get approved for loans and credit cards. It can also play a role in getting you approved for a rental property or even landing a job.
Good credit may also qualify you for the best loan and credit card terms, including lower interest rates, longer payment terms, higher credit limits and lower down payments.
Remember that your credit score doesn’t automatically qualify you for loans or credit cards. For example, if your debt-to-income ratio — your total monthly debt payments relative to your monthly income — is too high, a lender may deny your application, even with a 670 or higher credit score.
Here are several actions you can take to improve your credit score.
Your payment history accounts for 35% of your FICO Score. As such, timely payments are essential for building your credit score. If you have credit card or loan balances, continue making on-time monthly payments. You may see your credit score increase over time.
If you don’t have credit card or loan balances, taking out a small loan or using a credit card to build a history of on-time payments can increase your credit score.
Keeping your credit utilization ratio at 30% or lower may help raise your credit score. If your credit card debt exceeds 30% of your overall credit limit, use a debt repayment method, like debt avalanche, to pay it down.
If you don't have credit card balances and plan to use a credit card to build your payment history, never exceed 30% of your credit limit.
When you want to improve your credit score, it may seem logical to close old accounts to eliminate them from your credit report. However, closing your credit accounts — especially older ones — can shorten your average length of credit history, which comprises 15% of your FICO Score.
Instead, keep all your credit accounts open to maintain and lengthen your average credit age and potentially increase your credit score.
Credit mix only has a 10% impact on your FICO Score, but you can still improve it by creating a more balanced mixture of credit accounts.
Review your credit report and compare the number of credit card accounts you have with the number of installment loans, like a mortgage, auto loan or personal loan. If you have a disproportionate number of one type of credit account, opening a different credit account type may boost your credit score.
For example, if you have five credit card accounts and no installment accounts, it may be beneficial to take out a small personal loan to balance your credit mix.
Avoid applying for and opening too many new credit accounts in a short period, which create “hard credit pulls” on your credit report. Each inquiry can lower your credit score by up to five points, according to myFICO.
If you already have many credit inquiries on your credit report, don’t panic. They impact your FICO Score for 12 months, so you may start seeing your credit score improve in a year or less.
Your FICO Score also considers how many new accounts you open, so keeping these new accounts to a minimum may help push your credit score upward.
If you have no credit or poor credit, the previous credit-building options may not apply to you. In this case, you can establish or rebuild your credit with these credit-boosting tips:
Become an authorized user on someone else's credit card account
Take out a credit-builder loan
Take out a student loan
Take out an auto loan
Take out a certificate of deposit loan
Pay your rent (on time)
Your credit score impacts many parts of your life, from the car you can buy and apartment you can rent to the job you qualify for. Knowing the average credit score by state is a valuable way to gain perspective on your creditworthiness among others in your area and beyond.
If your credit falls below the average in your state, which ranges from 667 to 733, or you simply want a FICO Score boost, you can improve it by:
Maintaining on-time payments
Keeping your credit account balances in check
Keeping your credit accounts open
Having a variety of credit accounts
Avoiding applying for and opening new credit accounts
With an increased credit score, you may have access to more favorable loan and credit card terms, including lower interest rates, longer payment terms, reduced down payment requirements and higher credit limits.