Here's the average American's credit score

Here's the average American's credit score — and the key to improving yours

Your credit score is a key piece of your financial health equation. It’s a numerical indication of your ability to repay borrowed money and can determine your ability to get a mortgage, auto loan or personal loan.

Making consistent, on-time credit card payments over several years is the best way to build a reputable credit history. A solid credit history can set you up for long-term financial success, giving you access to the most competitive interest rates and premiere credit cards and even determining whether you’re approved for an apartment rental.

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However, consumers may make a significant financial mistake by not building their credit. Establishing payment history and repairing poor credit can take years, but it is possible.

Christian Widhalm, CEO at Bloom Credit, discusses the factors that impact credit scoring and practical ways for consumers to build and improve their credit scores to enhance their financial position.

A man is seen sitting at a desk thinking about credit card debt.
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How credit scores are determined

According to FICO, the average credit score in the U.S. is 717 out of 800. This is an almost 30-point increase from the average credit score of 690 in 2013, indicating that consumers are managing their debt payments better over time.

However, missed payments and delinquencies are also at an all-time high, and consumer debt is higher than pre-pandemic levels.

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47 million Americans have subprime credit, meaning their credit scores are between 300 and 600. Since lenders use credit scores to predict the likelihood of getting their money back, poor credit may be hurting consumers’ ability to build wealth.

There are several consumer credit bureaus, each with its own scoring system, meaning that the exact credit score will vary slightly across the different agencies. However, each agency examines the following factors:

Payment history
Amount of unpaid debt
Amount of available credit
The number of loans open
Any previous bankruptcies, home foreclosures, or debts sent to collections

While credit scores are an essential indicator of your financial health, it's not impossible to course-correct poor credit history.

Time and diligence are the keys to improving credit scores

Widhalm notes that there is a big distinction between the approaches to establishing a credit history and repairing a subpar credit score.

For those with limited or no credit history, there’s a simple solution: using a checking account payment history to demonstrate repayment ability.

“You can actually report 24 months of your checking account history almost overnight,” he explained. “Because you can establish tradelines on past payments that ultimately can help impact your credit score much more quickly.”

This approach can help consumers seeking a loan or credit card get approval while building up their credit over time. Those hoping to improve a bad credit score must take a different approach.

“On the credit repair side — for folks that have done something to impair their credit — that's a little bit harder,” he said. “That's going to take a bit more time. It’s going to mean establishing your repayment history.”

“One of the biggest things for a credit score is a positive repayment history," he says. "You have to start demonstrating how you are becoming more positive regarding your repayment history, which will take time.”

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