Credit scores are a vital part of your finances and overall financial health, and as with many things, they can change with age. So you may be wondering, what is the average credit score by age? Before we get into that, it helps to know a little bit about credit scores.
Your credit score is a three-digit number that represents a borrower's history of repaying loans and lines of credit. Credit agencies assign scores to people over 18 to represent their creditworthiness. Credit scores are calculated using the information found in your credit reports, which includes data like payment history, credit usage, the length of your credit history and more.
FICO® vs VantageScore®
FICO and VantageScore are examples of credit scoring models.
The factors that make up FICO credit scores are:
- Payment history: 35 percent
- Amounts owed: 30 percent
- Length of credit history: 15 percent
- Credit mix: 10 percent
- New credit: 10 percent
The factors that make up a VantageScore are:
- Payment history: 40 percent
- Age and type of credit: 21 percent
- Percent of credit used: 20 percent
- Total balances/debt: 11 percent
- Recent credit behavior and inquiries: five percent
- Available credit: three percent
What's a good credit score?
Credit scores typically range from 300 to 850, and the ranges vary depending on the credit scoring model.
With the FICO credit scoring model, credit scores ranging from 300 to 579 are considered poor. Scores that range from 580 to 669 are considered fair. Anywhere between 670 to 739 is considered good. A credit score between 740 to 799 is considered very good. Credit scores 800 and up are considered excellent.
Someone with a VantageScore that's 600 or less is considered to have poor or very poor credit. A fair credit rating is anywhere between 601 and 660. Scores between 661 and 780 are considered good credit scores. Anything over 780 is excellent.
What's a good credit score for my age?
A good credit score is a good credit score, as discussed above, regardless of age. But it may help you to know two things about age and credit scores. First, the length of credit history plays a role in assessing a credit score. Second, the average credit score for your age group can give you a benchmark to work with.
Average credit score for people in their 20s
For those in their 20s, the average credit score is 662. When you're first starting out and trying to build credit, it may take some time to gain traction.
Average credit score for people in their 30s
The average credit score for those in their 30s is 672. By now, you may have a 10-year credit history, more lines of credit and more types of credit, like a car loan.
Average credit score for people in their 40s
For those in the 40 to 49 age group, the average credit score is about 684. People in their 40s typically have a long credit history and a mix of credit types like car loans, mortgages and personal loans.
Average credit score for people in their 50s
The average credit score for borrowers between the ages of 50 and 59 years old is 706. By this time people often have a very long credit history and a full range of credit types that affect the average score.
Average credit score for people in their 60s and beyond
For borrowers 60 and over, the average credit score is 749. As a person approaches retirement they have a long and detailed credit history and, again, many types of credit.
How to improve your credit score
Some ideas to improve your credit score include:
Make on-time payments
Your payment history is one of the most important factors that make up your credit score, and making payments on time can build a positive payment history. One way to avoid late payments is by automatically paying your credit card bill to help manage and pay your bills.
Check your credit score
Regularly checking your score on Chase Credit Journey, which uses VantageScore 3.0, is one way to review and monitor your score for any changes.
Keep your balances low
It's suggested that cardmembers keep their balances, or credit utilization, below 30 percent of the total available credit. Credit utilization refers to the measure of how much you owe on your card versus your total credit limit and is another important factor that makes up your credit score.
Keep old accounts open
You may be wondering if you should close your old accounts, but remember that the age of your credit card accounts is a factor that makes up your credit score.
Avoid opening too many accounts
Applying for new lines of credit might seem like a good idea at first, but each application comes with a hard inquiry, which can negatively impact your credit score.
What's next?
Knowing the average credit score by age can be a helpful tool to understand how you compare to your peers. With good credit habits and the benefit of time, you may be able to increase your credit score above the average of your age group.
As an expert in personal finance and credit scoring, I can provide comprehensive insights into the concepts mentioned in the article. I have a deep understanding of credit scores, credit scoring models, and factors influencing creditworthiness.
Credit Scores and their Importance: Credit scores play a crucial role in assessing an individual's financial health. They are three-digit numbers representing a borrower's history of repaying loans and lines of credit. These scores are assigned by credit agencies based on information from credit reports, including payment history, credit usage, and the length of credit history.
FICO® vs VantageScore®: FICO and VantageScore are prominent credit scoring models. FICO credit scores consider payment history, amounts owed, length of credit history, credit mix, and new credit. Meanwhile, VantageScore incorporates payment history, age and type of credit, percent of credit used, total balances/debt, recent credit behavior, inquiries, and available credit.
Ranges and Good Credit Scores: Credit scores typically range from 300 to 850, and what is considered a good score varies by scoring model. In the FICO model, scores between 670 to 739 are considered good, while VantageScore deems scores between 661 and 780 as good.
Average Credit Score by Age: Understanding the average credit score by age provides a benchmark. In your 20s, the average score is around 662, in your 30s it's 672, in your 40s it's about 684, in your 50s it's 706, and for those 60 and over, it's 749. Age is relevant because the length of credit history contributes to the assessment.
Improving Your Credit Score: Several strategies can help improve credit scores:
- Make on-time payments: Payment history is crucial, so consistently paying bills on time is vital.
- Check your credit score: Regularly monitoring your credit score allows you to track changes and address any issues.
- Keep balances low: Maintaining a credit utilization rate below 30% positively impacts your score.
- Keep old accounts open: The age of credit card accounts influences your credit score, so it's beneficial to keep older accounts open.
- Avoid opening too many accounts: Opening numerous credit lines can negatively impact your credit score due to hard inquiries.
In conclusion, understanding credit scores, scoring models, and the average scores by age can empower individuals to make informed decisions and take steps to improve their financial health.
