This content entails the Average Credit Score by Income. The average credit score of individual changes according to factors like income, age, and location, although these parameters are not used in the actual calculations of credit scores. How exactly do these factors affect credit scores? Find out by reading the entire article.
Average Credit Score by Income
As stated above, factors like income, age, and location affect the average credit score of an individual although these factors are not used in the actual calculations for credit scores. This is because of some situations associated with certain ages, incomes, and locations.
Average Credit Score by Income 2022
Although income figures are not factored in your credit score calculations, wallethub’s analysis found a sharp increase in credit scores as income increased for certain individuals.
Without considering WalletHub’s analysis, it is most logical that sensible people tend to get financial education and make better financial decisions when their income rises. These actions give them a surge or increase in their credit scores.
Take a look at the factors affecting credit scores for example; it is more logical to pay your bills early when your income increases. A lower income leads to a lower ability to pay debts consistently.
Without the calculation, credit card issuers might look at your income levels before determining your credit limits. Therefore, the higher your income, the higher your probability of getting a high credit score.
Take a look at Wallethub’s table for average credit scores according to income;
|Annual Income||Average FICO Score|
|$50,000 – $74,999||737|
|$30,001 – $49,999||643|
|$30,000 or less||590|
Average Credit Score by Age 2022
Unlike your income, FICO pays attention to your age when trying to calculate your credit score, although they do not do it in the way you expect.
The major factor that is considered here is the average length of your credit history. This means that a young person can have a very high credit score and an old person, a low score.
Even with that consideration made, average credit scores tend to increase with age. Take a look at the table containing average credit scores according to age in a specific period of the year, 2019;
|Age||Average FICO Score|
Why the increase with age? Firstly, it takes time to earn a higher credit score. For that reason, a younger person is most likely to have a lower credit score than an older person. Another medium for measurement here is the fact that younger people have lower payment and credit histories than older people.
Age plays a role in your FICO score in five different ways;
Older accounts have made more payments that have increased their scores. This is only possible if those payments were made consistently and on time. The older you live, the longer your account history.
Credit Utilization Ratio
It is a proven fact that income increases with age and your income level affect your credit score. The lower your credit utilization (how much of your total available credit limit is in use) the higher its probability to affect your credit score.
Length of Credit History
As long as you have decided to keep your oldest account open, they will be calculated into your total account age.
People who calculate credit scores want to be confident that they can handle various types of debt. As your age increase, you get more opportunities to open different types of accounts. As an 18-year-old guy, you may have just one credit card, but a 40-year-old man may have a car loan, mortgage, personal loan, and several credit cards.
Recent Inquiries and Newly Opened Accounts
When you open a new account, there might be a little effect on your account. This may be because the lender made a hard credit check on your account. After a year, a hard inquiry will stop affecting your account. If you are older and you already have all your required accounts established, there will less likely be a need to incur hard inquiries that affect your score negatively.
Average Credit Score by Location
According to the FICO statistics carried out in the year 2019, 31 states and Washington DC had average credit scores that ranked higher than the national average of the United States of America. Take a look at the table below having data of the highest credit scores according to location;
|State||Average FICO Score|
These values were gotten because residents of each state seemed to have a defined set of characteristics.
Average Credit Score by Race
Although credit score calculations do not include different factors like a person’s age, race, salary, or where they live, there still lie some disparities driven by differences.
The table below shows FICO scores according to race differences by U.S. Federal Reserve data.
|Race||2019 Average Score||Classification|
Credit Score Percentile for Americans
Even if the highest credit score is 850. It is very hard to attain it. if you are wondering where you stand relative to other American consumers. according to the study conducted by Ascent, the table below shows the average credit scores of Americans.
|CREDIT SCORE||PERCENTAGE OF AMERICANS|
Frequently Asked Questions
What is the Average Credit Score of People Aged 22?
According to the data in this article, the average FICO score for people between the age of 20 to 29 is 662. This is a good credit score according to FICO’s grading system.
Average Credit Score by Age 18
The FICO score for people aged 18 according to Experian, October 2020 is 674.
How Common Is a Credit Score Over 800?
The percentage of people having credit scores of 800 and higher is 22% of American according to the Ascent.
What Is the Standard Credit Score That Everyone Begins With?
Everyone’s journey is different, therefore, there is no standard score for everyone to start with.
Does Anyone Have an 850 Credit Score?
Unbelievable but true. Only very few people get the highest credit score or all credit-holding Americans. This could be as small as 1.2% of all credit-holding Americans.