Currently, the average credit score nationwide is 717. (iStock)
For the first time in a decade, the average credit score has dropped slightly to 717. According to data released by FICO. The average score in 2023 was 718.
This decline is likely due to high interest rates and inflation causing consumers to miss payments and take on more debt. Since October, more than 18% of Americans have missed the due date on one or more credit accounts. According to FICO’s report, compared to April 2023, this is an increase of 4%.
Unpaid mortgages and auto loans have increased, but are still lower than they were before the pandemic. The biggest increase was in missed credit card payments, which are now above pre-pandemic levels.
“The clear cumulative impact of rising interest rates, rising consumer prices, and economic uncertainty has created a financial crisis, especially for consumers who rely heavily on credit cards for everyday expenses,” FICO said in its report. It’s a burden,” he said. “This can lead to higher credit card utilization and subsequent defaults on credit card payments.”
One way to restore your credit score is to consolidate your debts and pay them off faster. Credible can help you find the right loan for you by introducing you to some reputable personal loan providers that offer fast financing.
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Some people’s scores improve when medical debt is removed from their credit history
State governments are taking steps to limit the impact of medical debt on credit scores.
Recently, Arizona Governor Katie Hobbs announced The state will work with the nonprofit RIP Medical Debt to launch a statewide medical debt forgiveness initiative. More than 1 million Arizonans will benefit from this debt forgiveness.
“Hardworking, middle-class Arizonans should not be forced to have difficult kitchen conversations because of medical debt due to circumstances beyond their control,” Hobbs said. “Arizonas need rest and they have the right to support a government that will fight for them so that medical debt does not threaten their lives.”
Approximately $30 million in coronavirus relief funds are currently being used to cancel medical debt for some Arizona residents. Those with incomes less than 400 percent below the federal poverty line or who owe more than 5 percent of their annual income are eligible for forgiveness.
California is also working to reduce the impact of medical debt.Attorney General Rob Bonta expressed his support for law A proposal by state Sen. Monique Limon would ban medical debt from appearing on credit reports.
If the bill passes, California would become the third state to remove medical bills from credit reports. colorado and new york We did the same thing in 2023.
If you still have medical debt, you may be able to pay it off faster with a low-interest personal loan. Use online marketplaces like Credible to compare different interest rates and lenders to suit your needs.
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How Americans can increase their credit score
If you are concerned about your credit score, Numerous steps consumers can take This is to ensure that your score stays in a good range. These steps include:
- Avoid exceeding your credit limit: Credit usage affects 30% of a consumer’s credit score. Keeping your credit balances low will keep your credit utilization ratio low and your credit score high.
- Don’t close old credit card accounts: A consumer’s credit history considers all credit accounts and rewards consumers for long-term credit retention. Canceling a credit card erases its history, which can hurt your credit score.
- Apply for credit only when you need it: Opening a credit account just for the sake of opening one will have no effect. Too many credit checks lower a consumer’s credit because it shows that the consumer is not consistently using credit responsibly.
- Check your credit report at least once a year: Credit bureaus are not perfect, so errors may appear on a consumer’s credit report. Everyone with a credit score should review their report and check for any inaccuracies.
Paying off high-interest debt is also a way to improve your credit score. Visit Credible to consolidate your debt into one more manageable monthly payment.
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