American Credit Scores Have Taken a Hit

By: Anneken Tappe · March 12, 2024 · Reading Time: 3 minutes

Average credit scores are falling, as missed payments and high debt levels are hitting American tallies.

According to credit score company FICO , U.S. consumer credit scores fell to an average of 717 in October 2023 — a point lower than they were in July 2023. This might not sound like a lot, but it was the first time this happened since 2013.

Why Are Scores Falling?

Two main factors are hurting credit scores: missed payments and rising debt levels.

More than 18% of the population had a payment overdue by 30 days or more in the last year, according to FICO, citing data as of October 2023. That’s a 4% increase from the level recorded six months earlier.

At the same time, consumer debt has been creeping up. In a recent report the New York Fed estimates that credit card balances sat at $1.13 trillion in Q4 2023, rising by $50 billion in the final three months of last year.

What Does This Mean?

In a nutshell, worsening credit scores could signal that Americans are leaning on their credit cards more frequently, and finding it harder to pay off their balances. After years of rising price, American household budgets are stretched.

For context, however, credit scores hit a record high in 2021, fueled by a strong job market, pandemic stimulus payments, and overall rising household wealth. That’s why the decline in scores may not necessarily be a cause for concern just yet.

If you’re looking to track your money and get on top of your budget and credit score, SoFi can help. Take the first step in your financial wellness journey.

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