Studies of average credit scores show substantial disparities among different racial and ethnic groups. T🔯his article looks at those disparities and some possible reasons for 𝓡them.

What Credit Score Studies Have Found

The average credit score across all Americans was 717 as of October 2024, according to FICO. This is a one-point drop from the previous score reported in October 2023. The decrease was due to a rise in missed payments and more consumer debt. 澳洲幸运5开奖号码历史查询:VantageScore, which is a credit scoring model reported by the three credit reporting bureaus, reported an average credit score of 702 in its December 2024 report.

The Urban Institute compared median 澳洲幸运5开奖号码历史查询:credit scores in majority Black, majority White, majority Hispanic, and majority Native American communities. The White and Hispanic communities had the highest median scores, while the Black and Native American communities had the lowest. The study didn't include majority-Asian communities but did have a category for all communities. The table below breaks down the credit scores and their ranges for 🍨VantageScore (the basis for the study's scores) and FICO.

The group also looked at the median credit scores of young Americans by race, which varies by age gr🐎oup. It reported the fol🔯lowing for people between 25 and 29:

• Majority-Black communities had a median credit score of 582
• Majority-Hispanic communities had a median credit score of 644
• Majority-White communities had a median credit score of 687

What Do Credit Scores Measure?

Credit scores measure a variety of financial factors but do not take into account the person's race, age, income, or where they live. Still, disparities can be driven by differences in how much debt a consumer has, whether they've ever had a 澳洲幸运5开奖号码历史查询:credit card and for 🤡how long, and whether they are a homeowner with a mortgage—all of which can vary by race.

For example, "Black and African American college graduates owe an average of $25,000 more in 澳洲幸运5开奖号码历史查询:student loan debt than White college graduates," according to the Education Data Initiative. That debt burden can make it difficult to keep up with other payments, potentially resulting in a lower credit score. It can also make it difficult to obtain a mortgage to 澳洲幸运5开奖号码历史查询:purchase a home.

Credit scoring models tend to favor homeownership, tracking payments on 澳洲幸运5开奖号码历史查询:mortgages but generally not rent or utilities. Since renters make up a higher percentage of Black and Hispanic households compared with White and Asian ones, fewer Black and Hispanic consumers can benefit from mortgage-related inputs to their score, while a pristine rent payment record may have no impact. Newer credit scoring models, such as VantageScore 4.0, try to address that by factoring in rent and utility payments if they are reported to the 澳洲幸运5开奖号码历史查询:major credit bureaus.

How Credit Scoring Works

Both FICO and VantageScore have multiple scoring models, some for specific types of lending, such as credit cards vs. auto loans. Their scores are based on data in the credit reports compiled by one or more of the 澳洲幸运5开奖号码历史查询:three major national credit bureaus (Equifax, Experian, and TransUnion), and because not all 澳洲幸运5开奖号码历史查询:creditors supply information to every bureau, credit reports can differ from ♈one bureau 💛to another.

FICO and VantageScore each generate scores on a scale of 300 to 850 and use relatively similar criteria. FICO, which is the older of the two companies, remains the most commonly used system. The two factors that have the biggest impact on an individual's credit score are:

• How regularly they pay their debts on time, which accounts for 35% of their score.
• How much credit they have available and how much they are currently using (a figure known as their 澳洲幸运5开奖号码历史查询:credit utilization ratio), which accounts for 30%.

In other words, those two factors add up to almost two-thirds of a person's score.

Weighted less heavily but still important are how long they've had credit accounts (longer is better), 澳洲幸运5开🅘奖号码历史查询:how many times they've applied for new credit in the last 12 months (fewer is better), and whether or not they show a mix of credit types, such as a credit card, mortgage, and auto loan (some variety is good).

What Is Considered Good Credit?

Experian, one of the three major credit reporting companies, divides the quality of credit into 澳洲幸运5开奖号码历史查询:five tiers, beginning with Poor and culminating at Exceptional. Anything below 580 is considered Poor, and it takes a score of at least 670 to move into the Good range. A Fair score falls between the two. Very Good begins at 740, and those with a score of 800 or more enjoy the label of Exceptional.

The Bottom Line

Credit score disparities among ra🎃cial and ethnic groups exist, but they are largely the result 🌌of external factors—such as differences in homeownership, debt levels, and access to credit—not race itself. These disparities reflect broader societal and financial inequalities, and addressing them will require changes both to credit scoring models and broader economic policies.