Delayed Payments by Americans Have Triggered the First Dip in Credit Scores in a Decade (2024)

FAQs

Have FICO scores dropped for the first time in 10 years? ›

Credit scores decrease for the first time in a decade as more borrowers fall behind on payments. The national average credit score fell to 717, according to a new report from FICO.

FICO said the one-point drop in credit scores in late 2023 was driven by an increase in Americans missing payments and also by rising debt levels. The last time credit scores fell was between April and October 2013, when the average FICO score dropped by two points, to 690.

For the first time in a decade, average credit scores have decreased slightly to 717, according to data released by FICO. In 2023, average scores sat at 718. This decline is likely due to high interest rates and inflation that are causing consumers to miss more payments and take on higher levels of debt.

According to FICO data, a 30-day missed payment can drop a fair credit score anywhere from 17 to 37 points and a very good or excellent credit score to drop 63 to 83 points. But a longer, 90-day missed payment drops the same fair score 27 to 47 points and drops the excellent score as much as 113 to 133 points.

Heavy credit card use, a missed payment or a flurry of credit applications could account for a credit score drop. Amanda Barroso is a personal finance writer who joined NerdWallet in 2021, covering credit scoring.

The length of time information takes to come off your credit report ranges from two to 10 years—or indefinitely if an account remains open. However, that doesn't mean it will impact your credit score for that long, and if a negative mark is inaccurate, you have a right to dispute it with the credit bureaus.

A credit reporting company generally can report most negative information for seven years. Information about a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Bankruptcies can stay on your report for up to ten years.

The first credit score was introduced in 1989, but the concept of evaluating a company or individual's creditworthiness—or ability to repay a line of credit—has been around longer. Attempts to standardize this process began as far back as 1841.

Your credit habits haven't changed significantly

This means that if you keep using the same credit accounts to make the same payments month in and month out, the information they hold on you…isn't really changing. Your score is unlikely to drop, but it's also not going to rise.

The latest credit score data is in and as of October 2023, the national average FICO® Score now stands at 717.

What is the number one thing that affects your credit score the most? ›

Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you.

Lenders and other service providers report arrears, missed, late or defaulted payments to the credit reference agencies, which may have a negative impact on your credit score. Making payments on time is an important way to show you can manage your finances responsibly.

A late payment will be removed from your credit reports after seven years. However, late payments generally have less influence on your credit scores as more time passes. Unpaid debts and debts in collections also generally come off your credit reports after seven years.

Thankfully, the answer to how long a late payment will stay on your credit reports is typically pretty simple: seven years. Before you lose all hope and think your road to financial progress has hit an insurmountable obstacle, take a deep breath. Yes, seven years seems like a really long time.

Highlights: Even a single late or missed payment may impact credit reports and credit scores. Late payments generally won't end up on your credit reports for at least 30 days after you miss the payment. Late fees may quickly be applied after the payment due date.

If you haven't used credit in more than 10 years, your old accounts have most likely dropped off your credit report by now, which means there's nothing in your credit history to score.

The average consumer credit score in the US has dropped for the first time in a decade, albeit by just one point. The score dipped to 717 in October from 718 in July, according to Fair Isaac Corp., the Montana-based creator of the FICO credit score.

Reasons why your credit score could have dropped include a missing or late payment, a recent application for new credit, running up a large credit card balance or closing a credit card.

The latest credit score data is in and as of October 2023, the national average FICO® Score now stands at 717. This is one point lower than it was earlier in 2023 and reflects the first time the metric has decreased in a decade as shown in Figure 1.