Why Credit Scores Aren't Falling Even As More Borrowers Miss Loan Payments

Key Takeaways

• In July 2024, the average FICO credit score remained steady at 717.
• FICO scores have not fallen despite growing consumer debt, rising delinquencies and fewer new credit accounts.
• Factors like missed payments and high credit utilization ratios can negatively influence people's FICO scores.

Despite evidence that more people are missing debt payments as they contend with high interest rates and price pressures, the average credit score isn't changing much.

FICO measures the average credit score twice a year to assess Americans' financial health. In the most recent reading released this week, the average credit score was 717—the same as the last reading and one point lower than the same time last year.

The stability of average credit scores is important as people turn more to credit cards to keep up with inflation on everything from groceries to rent. High borrowing costs have exacerbated household budget issues, leaving some struggling to manage their debt.

Credit Card Delinquencies Surpass Pre-Pandemic Levels

Can Arkali, Senior Director, Scores and Predictive Analytics at FICO, notes that while borrowers are missing more payments on mortgages and auto loans, delinquencies still remain below pre-pandemic levels, helping to keep the average credit score steady.

On the other hand, missed credit card payments could be a cause for alarm, Arkali said.

“Missed payments on bankcards have grown to the point that they are now higher than pre-pandemic levels," Arkali said. "[Missed payments] can weigh on people—especially those who are already financially distressed—and lead to higher credit card utilization and subsequent defaults on credit card payments.”

As of April 2024, more than 18% of borrowers had 30-day or more late payments on at least one of their credit accounts in the past year, which is up 5% from last year. The average credit card utilization rate (the proportion of credit someone uses to the amount they’re extended) grew to 35%, up 3% from April 2023. 

While the Federal Reserve recently cut their influential interest rate, borrowing costs still remain historically high, deterring some from taking out new loans and borrowing. As of April 2024, a smaller portion of people (44%) opened new credit accounts in the past year compared to last year (45.5%). 

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