Credit scores are a huge part of every consumer’s financial life. Whether you can get a place to live, a job, a loan, insurance, or utility services can be affected by your credit report. Your score can affect how much you’ll pay for those products and services as well.
With credit and credit scoring being so important, it’s shocking how little people really know about their credit. We’re always eager to improve public financial literacy, and to empower people to know where they stand.
US Credit Score Distribution
When it comes to credit scores in the US, most people’s credit is generally good. Based on our “what is a good credit score?” infographic, at least 58% of people have “Good” credit or better. Only 7% have what we would consider genuinely “Poor” credit. And the remainder are somewhere in between, with “subprime” or “acceptable” credit.
Credit Score Scale Factors
You’ll find this chart in a lot of places, and that’s good; it’s important to know what is affecting your credit in order to get the best score possible.
The standard chart we’ve pictured is for the FICO™ score:
- 35% – Payment History
- 30% – Amounts Owed
- 15% – Length of Credit History
- 10% – New Credit
- 10% – Credit Mix
Knowing this breakdown tells you the #1 thing you can do to improve credit is to make payments in full & on time every month. The #2 factor is to keep balances owed as low as possible.
Besides FICO™, there’s another scale that is sometimes used, and that is the VantageScore. Its scale factors are a bit different:
- 40% – Payment History
- 21% – Depth of Credit
- 20% – Utilization
- 11% – Balances
- 5% – Recent Credit
- 3% – Available Credit
The “depth” category takes into account the length of credit history and the types of credit used, which FICO™ covers under “credit mix.”
Learn more about the different scores in our posts “FICO Scores vs. VantageScores: Know the Differences, and Recent Changes to VantageScores Benefit Consumers”
Average US Credit Card Debt
When calculating the average credit card debt for US consumers, there are 2 ways to do the math: all households, or just households with credit card debt.
If we were to include all households, the average is $5,700 (according to ValuePenguin.com).
But if one includes only the households with debt, NerdWallet tells us that the average is $15,762.
Which average is more useful? If you look at your own credit card debts and find you owe $7,500, you might have a different outlook depending on whom you’re being compared to. If you compare yourself to everyone, you owe $1,800 above the average, so you might think you’re doing relatively poorly. This is because you’re comparing yourself to all households including those with no credit card debt at all.
But if you exclude them, and just compare yourself with the households with credit card debt, you might be encouraged to know you owe $8,260 less than the average.
There are good arguments for using both statistics. Ultimately, your goal should be to join the households with no credit card debt at all.
Credit Card Debt By State
This set of statistics counts every household in each state, including the ones with no credit card debt. You can see the spread is $2,301 from the highest-debt state, Alaska, to the lowest, Iowa. The darker states on the map have higher average credit card debt, while lighter states are lower.
If you have debts that are higher than the averages listed, call us today for free, confidential counseling. We’ll help you come up with a strategy to become debt-free and take control of your personal finances.