A credit score is a way of evaluating the financial situation of the borrower and measuring the risk associated with lending them money. It is used by banks, credit card companies, and other third-party institutions to calculate the likelihood of paying off all the debts you accumulate. A credit score is represented by a three-digit number, and the higher the credit score the better.

How is Your Credit Score Calculated?

There are several different credit scoring models used by lenders to evaluate a borrower’s creditworthiness, and the FICO credit score is the most commonly used one. FICO scores range between 300 and 850.

Credit scores are calculated using different information like payment history, length of credit history, current debt burden, types of credit, and recent inquiries play the most significant role in determining your FICO score. Lenders are most likely to look at some other things as well, such as your debt-to-income ratio.

Depending on your FICO score, you will fall into one of these categories:

  • Poor – Any credit score below 580. (16% of the population)
  • Fair –  A FICO score between 580 and 670. (17% of the population)
  • Good – Scores between 670 and 740 fall into this category. (21% of the population)
  • Very good – A FICO score between 740 and 800. (25% of the population)
  • Exceptional – A FICO credit score over 800. (21% of the population)

Credit Score Trends Over the Years

The average FICO score has reached its highest point ever, and is currently at 704 with a steady upward trend. After the 2008 financial crisis that shook the world, the average FICO credit score was at a low 686. Since then it has been in a constant rise, and after hitting 700 for the first time in 2017, it has maintained the same momentum and continues to rise.


Average FICO score





















Average Credit Scores by Age

The current data shows a strong correlation between a FICO score and age. And it makes sense, since young people have a short credit history and a limited borrowing capacity.

People in their 30s and 40s usually have established careers, steady income, a longer credit and good payment history, which leads to higher FICO scores. However, people in this age group carry more mortgage debt. People over 60 years old have the strongest scores since they have been using different credit products for a long time, and they have excellent repayment histories, which makes them trustworthy in the eyes of lenders. Here is how the average FICO score correlates with age:


Average FICO score












Credit Scores and Income

A 2018 study shows that income isn’t the most significant factor for determining credit scores. According to this research, there is no strong correlation between income and credit scores. Most credit score models are based on the credit history and factors surrounding it, so income doesn’t play a part in them. However average credit score by age may vary a lot.

Even though income plays an indirect role, and it may look like it’s strongly connected to a credit score at first, it turns out that age is a more significant factor for predicting credit scores. People with both high and low levels of income are in all credit score categories, which leads to the conclusion that income only has limited signaling power to one’s ability to repay any potential loan.

A typical American consumer has a 704 FICO, 675 Vantage Score (another popular method besides FICO), 3.1 credit cards with $6,354 average balance on them, with average $201,811 mortgage, and $24,706 non-mortgage debt.

Why Do We See an Increase in Credit Scores?

In 2018 we saw a consistent 4-5 point rise in an average credit score across all age groups compared to 2017. This increase is attributed to fewer consumers in the lowest credit score ranges, as well as a higher number of people with exceptional scores. 

It also seems that people are seeking loans more responsibly and trying to pay bills on time. Only 42.2% of people had 1 or more credit inquiries in the last year, which was a 1% decrease compared to 2017. A greater number of loan requests has been linked to an increased repayment risk, which is why it is a factor in average credit score calculations.

Another possible reason for the national increase in average credit scores is an increase in awareness and education of the consumers. It appears that people who pay attention to their FICO scores are more likely to make better financial decisions and have a higher credit score. FICO continues to focus on customer education as they see it as a way for people to learn about fiscal responsibility and reach their financial goals. 

If you’re worried about your credit score due to income, it could be beneficial to learn that credit score isn’t strongly correlated to the money you make each month or your current balance. 

At CreditNinja, credit score is an important, but not a determining factor for taking out a loan and getting approved — if you’re thinking about applying for short-term cash, start an application and see how much you qualify for today.

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