If you’re like most adults in the U.S., you’ve been spending less on credit cards than you did before the pandemic. Many Americans have also been using less of their available credit and even paying off debt, in many cases with the help of stimulus checks.
All of these trends have led to a sizable boost in the average American's credit score, according to the “State of Credit 2021” report from Experian, one of the three main credit reporting agencies.
Experian found the average VantageScore credit score reached 695 in 2021, up from 688 in 2020 and 681 a year earlier. According to FICO, a data analytics firm that uses slightly different measures to report credit scores, the average credit score hit a record high of 716 recently.
Despite the small difference in those two numbers – which is due to the different ways the VantageScore and FICO scores are calculated – both are what experts consider good scores. A score from 300 to 579 is poor, anywhere from 580 to 669 is fair, 670 to 739 is good, 740 to 799 is very good, and 800 to 850 is exceptional.
Average credit scores rose for all generations except one, and every generation's typical score is currently rated as fair or good, according to Experian. From 2019 to 2021, millennials saw their scores increase by the most points, from an average of 648 to 667 – nearly reaching "good " territory. The only age group that saw a fall in credit scores from 2020 to 2021 is the Silent Generation, and even after the mild decline they have a higher average score (730) than all the others.
Average credit score, by generation
- Gen Z (ages 16 to 24): 660.5
- Gen Y (millennials, 25 to 40): 667.4
- Gen X (41 to 56): 685.2
- Boomers (57 to 75): 724.2
- Silent Generation (76 and up): 729.9
- U.S. average: 695.3
The rise in credit scores is obviously a positive sign for Americans’ overall financial health. Higher credit scores can be an entryway to accessing lower-interest loans, securing housing and generally gaining a stable financial footing.
The list doesn't end there: a poor credit score will have you paying more for things like insurance. Home insurance premiums can be up to 114% higher for homeowners with below average credit scores when compared to those with excellent scores. Car insurance companies also use credit scores to determine your rates, although that practice is now being banned or restricted in some states for being unfair. Latino and Black Americans overall have lower credit scores than their white counterparts, due in part to having been shut out from credit-building opportunities.
If you don't have a credit score yet, or you're unhappy that you're on the low end of the spectrum, there are steps to take to build credit and boost your credit score. Among them, you could ask your local credit union for a credit builder loan or become an authorized user on a trusted adult’s existing credit card.