Mar 6, 2024 - Economy

FICO credit scores drop for first time in decade

Data: Fair Isaac Corporation; Chart: Axios Visuals
Data: Fair Isaac Corporation; Chart: Axios Visuals

The national average FICO score has ticked lower.

Why it matters: Though just a 1-point drop from the last reading three months earlier, it's the first time the score has decreased in a decade.

Between the lines: The downtick in the latest reading was driven by an increase in missed payments and rising debt levels for consumers, FICO creator Fair Isaac says.

  • In October 2023, just over 18% of the population had a 30-day or worse past-due payment in the last year, up 4% compared to April 2023.
  • Average credit utilization — the amount of available credit a borrower used — was 35% in October, up a percentage point from pre-pandemic 2019.

By the numbers: The latest metric, for October 2023, shows an average score of 717. It had been steadily increasing since October 2013, when it was 690.

  • After a 2-point increase from 2022, the score had held steady from April 2023 to July 2023 at 718.

The big picture: "Given that the FICO Score is a lagging, not leading, economic indicator, this suggests that the effects of high interest rates and persistent inflation may be starting to weigh on consumers, especially those already struggling to manage their finances," FICO noted in the report.

What we're watching: The coming months will show whether the drop is an anomaly or an early warning about consumer repayment behavior, the company notes.

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