(Bloomberg) -- The average consumer credit score in the US has steadied after its first slip in a decade.
The national average FICO credit score stood at 717 in July, the same as in April of this year and October 2023, according to Can Arkali, a senior director at Fair Isaac Corp., the Montana-based creator of the widely used metric. The October 2023 score fell by one point, the first decline after years of gains.
Two key credit metrics — missed payment rates and borrower balances — continued to increase in April from last October. But they are rising at a slower pace than last year, and meanwhile, fewer consumers are seeking new credit, according to the report from Fair Isaac. That’s keeping the national average steady.
“While missed payments on mortgages and auto loans have increased in frequency, they are still below pre-pandemic levels,” according to the report. “Missed payments on bankcards, however, have grown to the point they are now higher than pre-pandemic levels.”
FICO scores typically range from 300 to 850, and incorporate credit metrics including payment history, current debts and amount of new credit sought, and can help financial institutions make decisions on borrowers. Over time, FICOs can also offer a peek into the health of the US consumer, an area that’s closely tracked by policymakers and financial markets.
FICO scores rose for years, boosted in part by governmental stimulus and consumer savings levels during the pandemic has cooled off. Now pandemic savings have run out, credit card balances have ballooned and lenders have been forced to make credit harder to get after experiencing losses.
“We are sufficiently removed from the heart of the pandemic,” said Arkali. “But I don’t think we are completely out of the woods yet.”
Borrowers are managing economic conditions differently, with the most pain being felt by lower score consumers, according to FICO. Scores for non-prime borrowers are now below pre-pandemic levels, falling six points from April 2023 to April 2024. Meanwhile, prime borrowers have remained stable at 768 over the same period.
“The overall US credit population is not really a monolith,” Arkali said. “There are specific pockets in that population which may actually exhibit different types of behaviors.”
(Updates with range of Fico scores in fifth paragraph)
©2024 Bloomberg L.P.