Sep 8, 2021 - Economy

Average credit score reaches highest level in 13 years

Source: Experian; Note: Data is based on a statistically relevant sample of Experian's consumer credit database, scores range from 300–850; Chart: Axios Visuals

An unexpected pandemic side effect has legs: Average credit scores are still ticking up — to the highest in 13 years, new data from credit-reporting firm Experian shows.

Why it matters: America saw the worst recession on record (albeit the shortest). But stay-at-home orders that limited what consumers could spend on paired with stimulus funds that went toward paying down debt helped lift the average credit score — a phenomenon that cut across all generations.

Details: The pandemic hasn't interrupted the yearslong march higher for the average credit score, according to Experian’s 2021 State of Credit report, which covers Q2.

  • The median score rose 10 points to 707.
  • "[S]core improvements were supported by fewer missed payments, lower credit utilization rates and reduced card balances," the company said in a release.

Details: Average utilization rates fell 1 percentage point to 25%, after declining 5 percentage points in 2020.

  • Average card balances fell for every generation except Gen Z, which saw balances jump by $115 year over year (they also saw the biggest dropoff in delinquency rates for bills 90+ days past due)

But, but, but: The improvements don’t tell the whole story. Millions (some who may not have credit histories) faced financial hardship — and still are.

  • One example: Over one-fourth of Americans say they are in households that have difficulty paying for usual household expenses, according to the latest Census Bureau's Household Pulse Survey.
  • Experian didn't break out credit scores by demographics in the report.

The big picture: Pandemic-era programs that played a role in shoring up finances in the past year have dried up.

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