Economic conditions can vary widely among states. It's difficult to get a complete picture of a given area without taking all the key factors into consideration. In the case of credit scores, knowing the average can help residents of a state see how they compare to their neighbors — and make it simpler for those considering a move to that state to learn more about how they'd fit in economically. It can also be a factor in assessing business opportunities within a state.

Key Takeaways

  • The FICO Score national average was 710 in 2020. This represents an increase of seven points (or 1%) from 2019, which constitutes the biggest annual improvement in roughly a decade.
  • Minnesota had the highest average FICO score, as of 2020, with Wisconsin, Vermont, South Dakota, North Dakota, and Washington close behind.
  • The state with the single lowest average FICO score in 2020 was Mississippi, which was the only one to fall below 680, followed by Louisiana, Alabama, Texas, Georgia, and South Carolina.
  • As reported in 2018 by the Board of Governors of the Federal Reserve System, there exists a moderate correlation between household income and consumer credit scores.
  • Average credit card debt is another figure useful for approximating a consumer's individual financial circumstances within a given state, though it isn't conclusively correlative with average credit scores.

Understanding Credit Scores

In the most basic terms, a credit score is a three-digit number that financial institutions can use to determine an individual's creditworthiness, which is typically updated monthly. Your credit score is based on a number of factors pulled from your three credit reports, such as overall debt and total number of late payments. The highest possible credit score is 850, while the lowest is 300.

Lenders see having a higher credit score as a sign that a borrower is more likely to repay their debts. Not only can it affect whether or not you'll qualify for insurance or a loan, it can also affect how much you'll pay overall. Lenders charge higher interest rates and premiums to those with a lower credit score to account for the increased risk to lenders.

In order to improve a bad credit score and/or keep your current one strong, be sure to pay down debt, make timely payments, and maintain a zero balance on credit accounts.

Rather than each one having a specific value, credit scores fall within one of five possible ranges, which provides an easy reference for an individual's financial health. For instance, someone with a credit score of 800 or above, considered "Exceptional," will have a much easier time qualifying for a loan. Conversely, anyone seeking a loan with a credit score of 669 and below, also known as a subprime borrower, may find themselves paying more than most, should they be approved at all.

FICO Score Ranges
850800 Exceptional
799–740 Very Good
739–670 Good
669–580 Fair
579–300 Very Poor

Bear in mind that creditors may define their own ranges, thus making it possible for an individual to technically have more than one credit score. The ranges seen above, however, are the ones most frequently utilized due to the market domination of the FICO score model.

Why FICO?

A FICO score is a specific credit score that was created by the Fair Isaac Corporation (FICO) in 1989. Considering that FICO scores factor into more than 90% of the credit decisions made in the U.S., they are the ideal figure for assessing the financial health of a given area. FICO scores consider payment history, current level of indebtedness, types of credit used, length of credit history, and new credit accounts when determining creditworthiness. This offers multiple methods for explaining why certain states have credit scores lower or higher than their neighbors.

The FICO Score national average was 710 in 2020. This represents an increase of seven points (or 1%) from 2019, which constitutes the biggest annual improvement in roughly a decade.

Note that FICO isn't the only name in the game. Created in 2006 by the the top three credit bureaus, VantageScore is a consumer credit rating product that serves as an alternative to the FICO score. Despite claiming to be more accurate than other models, due to employing advanced algorithms and machine learning techniques, FICO's widespread acceptance makes it a better candidate for the purposes of this article.

State-by-State Breakdown

As of 2020, Minnesota had the highest average FICO score, with Wisconsin, Vermont, South Dakota, North Dakota, and Washington close behind it. The District of Columbia and Arizona grew the most from 2019 at 10 points each, while Delaware, North Carolina, and Idaho all grew by nine. Of note, the majority of states with the greatest average credit score improvements were relatively close in 2019 to the current national average. Additionally, even the states with the highest average credit score are still in the "Good" category, with Minnesota just one point shy of "Very Good."

The quality of your credit score has a direct impact how much you might pay for any loans you take out, including the interest rate and any premiums.

FICO Scores. The state with the single lowest average FICO score was Mississippi, which was the only one to fall below 680. The next lowest was Louisiana, followed by other neighboring states, including Alabama, Texas, Georgia, and South Carolina. Interestingly, high-score states like North and South Dakota grew the least from 2019, at only three and four points, respectively. Behind those two were Hawaii, Nebraska, and Vermont, which also started with scores over 720. On a somewhat encouraging note, no state has an average credit score below the "Good" category, though this doesn't indicate that a state's typical residents are financially secure.

FICO and Household Income. As reported in 2018 by the Board of Governors of the Federal Reserve System, there is a moderate correlation between household income and consumer credit scores. This would suggest that rising income inequality could lead to widening disparities in credit access. It's no coincidence that credit scores tend to be lower in the Southern portion of the U.S. A 2018 study from the Southern Legislative Conference found that 65% of the top 20 poorest states in the U.S. in the year prior were located in the South. Mississippi is particularly noteworthy in this regard; as of 2019, the Magnolia State had both the lowest median income and the highest poverty rate in the U.S.

FICO and Credit Card Debt. Average credit card debt is another figure useful for approximating a consumer's individual financial circumstances within a given state, though it isn't conclusively correlative with average credit scores, despite providing insight into the amount of one form of debt a typical individual was taking on. Granted, the 2020 data is also somewhat skewed due to the ongoing COVID-19 pandemic. Currently, total U.S. outstanding credit card debt ($756 billion) is at its lowest level since 2017, due in large part to a reduction in consumer spending amid lockdowns and business closures. It is interesting to note, however, that states that generally had higher FICO scores saw a smaller decrease in credit card debt from 2019—with North Dakota falling the least at 8%—while the inverse is also true (albeit to a lesser extent, as it was the District of Columbia that saw the greatest drop (20%).

The Bottom Line

It's important to keep in mind that the economic conditions of the state in which you're living in don't inherently determine what your credit score will be — it's your responsibility. Averages are calculated by adding together all of the values in a given data set and then dividing by the amount of numbers there are; while it's possible that most of the values will be relatively close to each other, outliers can exist. In order to end up on the higher end of that scale, make sure to continue to pay down your debts, avoid late payments, and try to maintain as small a balance as possible on any credit accounts you may have.