Credit score

Average credit score hits highest level in 13 years

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

An unexpected side effect of the pandemic has legs: Average credit scores continue to rise – to the highest in 13 years, according to new data from credit reporting firm Experian.

Why is this important: America has had the worst recession on record (albeit the shortest). But stay-at-home orders that limited what consumers could spend, coupled with stimulus money to pay down debt, helped boost average credit scores — a phenomenon that has spanned generations.

Details: The pandemic has not halted the year-long rise in the average credit score, according to Experian’s 2021 Credit Condition Report, which covers the second quarter.

  • 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 statement.

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

  • Average card balances fell for all generations except Gen Z, who saw their balances jump $115 year-over-year (they also saw the biggest drop in rates). overdue for invoices overdue for more than 90 days)

But, but, but: Improvements don’t tell the whole story. Millions of people (some who may not have a credit history) have faced financial hardship – and still do.

  • An example: More than a quarter of Americans report being in households that struggle to pay for usual household expenses, according to the Census Bureau’s latest Household Pulse Survey.
  • Experian did not break down credit scores by demographics in the report.

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