A study of average credit scores for different racial groups shows substantial disparities, with Hispanics scoring on par with the national average, and the average score for Blacks falling far below that level. Meanwhile, the White and Asian populations register scores significantly higher than the average.
Here is how the numbers break down.
- Credit scores do not factor in age, race, income, or place of residence.
- However, the financial factors that are used to calculate credit scores can disproportionately affect certain racial groups.
- Asian and White populations in the United States have the highest average credit scores. Hispanics roughly match the national average, and Black credit scores as a group are below average.
- The average score among all of the groups is considered Good to Very Good.
What the Credit Score Study Found
Based on FICO score data, payment processing company Shift calculated that the median credit score across all Americans was 703 in 2019. That’s within close range of the 701 average for Hispanic consumers. Blacks, however, registered an average credit score of just 677.
The Asian population enjoys the highest credit scores, with an average of 745. This is slightly above the average for White Americans, which stood at 734 in 2019.
Despite these differences, the averages for all racial groups fell into the Good range, except for the Asian population’s average, which was classified as Very Good.
Credit scores measure a number of financial factors but do not take into account the person’s age, race, salary, or where they live. Still, disparities can be driven by differences in take-home pay, how much other debt a consumer has, whether or not they’ve ever had a credit card, and if they are a homeowner.
|Average FICO Score by Race|
|Race||2019 Average Score||Classification|
Understanding Credit Scoring
Credit scores can be confusing. There are multiple different scoring models, along with three major credit reporting agencies. However, FICO is the most commonly used system, generating a score of 300 to 850.
The two biggest impacts on your credit score are:
- How regularly you pay your debts on time, which accounts for 35% of your score
- How much of your available credit you’ve tapped, which accounts for 30% of the total calculation
In other words, these two factors comprise almost two-thirds of your score.
Weighted less heavily but still important are how long you’ve had a credit history (longer is better), how many times you’ve applied for new credit in the last 12 months (fewer is better), and whether or not you show a mix of credit types (variety is good).
What Constitutes ‘Good’ Credit?
Credit reporting agency Experian defines quality of credit according to five tiers, beginning with Poor and culminating at Exceptional. Anything below 580 is considered Poor, and it takes a score of 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
Access to credit is an important input to credit scores, as each score measures a person’s track record in handling credit. For those who have not had the opportunity to open a credit card account, building a positive credit history can be difficult. Likewise, having a low income can make it difficult to cover expenses and easier to miss a credit card payment.
Similarly, other types of debt can get in the way. For instance, Black Americans often have more student loan debt than White Americans, which can interfere with their ability to make timely payments on other debt, in turn damaging their credit history.
Further, credit scoring models tend to favor homeownership, tracking payments on mortgages but generally not on rent or utilities. Since renters make up a higher percentage of Black and Hispanic households compared with White and Asian households, fewer Black and Hispanic consumers can benefit from mortgage-related inputs to their score, while a pristine rent payment record may have no impact.
Shift Credit Card Processing. “Credit Score Statistics.”
Experian. “What Is a Good Credit Score?”
myFICO. “What’s in My FICO® Scores?”
myFICO. “What Is New Credit?”
Education Data Initiative. “Student Loan Debt by Race.”
U.S. Census Bureau. “Quarterly Residential Vacancies and Homeownership, First Quarter 2022,” Page 9.
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