Average credit scores by state

Recently, Fair Isaac (FICO) asked the provocative question, “How does your #FICO Score compare to the rest of the US?”

The accompanying link leads a new homepage at the company’s consumer-oriented website, myFICO.com.  It features an interactive map of the United States on which you can see a national average credit score (692) and averages for individual states.  The state with the highest average credit score in the country is North Dakota, at 720.

The map below shows the above average states in green, and the below average states in white.

US states with above average credit scores

The state-by-state breakdown is a departure for FICO, who has never answered the same type of illustration published years ago by national consumer reporting agency and competitor Experian.  Unfortunately the basis for the Experian map was the infamous Fake-O score, the PLUS score.  But despite that, let’s face it:  It was, frankly, full of Fake-O FICO funky fun.  Fair Isaac gets that.

Today, for its part, Experian seems to have moved on to yet another gambit: The highly-touted (media are suckers for anything new), VantageScore.  NationalScoreIndex.com (the address that previously hosted the map) now forwards to something called Live Credit Smart (click on “The State of Credit” on the left menu).  The interactive PLUS score map (similar to FICO’s) that was on the homepage at NationalScoreIndex.com is now at http://www.nationalscoreindex.com/USScore.aspx (if you care).

Confused about which score is relevant?  You should be.  In 2008, FICO told creditscoring.com that the TransUnion version sold on myFICO.com is FICO Risk Score, Classic 98 which is not the model mentioned in the Fannie Mae lending guidelines (section B3-5.1-01 (p. 427, pdf p. 455)).  On the other hand, the Equifax score at myFICO is, indeed, the same score mentioned by Fannie.  But, the one thing that the score used for mortgage lending or even the myFICO.com score is not is something called “FICO 8.”  Fair Isaac states, “When a significant number of lenders have upgraded, we will work with the credit reporting agencies to provide FICO 8 scores to consumers here on myFICO.”

Yet, FICO 8 is the score model in countless blog posts by FICO personnel as if it is significant.  They have not mentioned the shiny new map.  Yesterday’s commentary about the distribution of consumers by score doesn’t even bring it up.

It is anybody’s guess which score model is represented in the US state map.  And it used to be all about the median not the mean (“average”).  And there is a new AOR (with the typical, cliché wordplay right in the press release title).  And a new CEO, a board member.  And no coming to terms with the employers thing even as the rest of the world is enlightened (albeit with, in one case, a strange, contradictory result).  Still, some keep the myth going.

Wonks, you have got to love this.  Stay tuned.

Freddie Mac eases credit score requirement for refinancing, 2012-01-05

Effective for Freddie Mac settlement dates on or after January 5, 2012, we are… Eliminating the minimum Indicator Score requirement of 620 for Relief Refinance Mortgages – Same Servicer with LTV ratios less than or equal to 80 percent, provided the principal and interest payment does not increase by more than 20 percent.”

Freddie Mac, regarding its “Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-1.”

Tribune report vs. claim from FICO

FICO scores have been around since the 1950s, but they didn’t become a major factor in mortgage lending until 1995, when Fannie Mae and Freddie Mac began recommending their use to help determine a mortgage borrower’s creditworthiness.” – Chicago Tribune

“First general-purpose FICO score debuts–BEACON at Equifax. (1989)” – FICO score company Fair Isaac

Other myths, urban legends and misinformation

influence > media > newspapers > tribune

National Association of Realtors – NAR credit policy

The NATIONAL ASSOCIATION OF REALTORS actually has a written credit policy; it is named “NAR Credit Policy.”


The policy states:  “NAR questions the assumption that borrowers who agree to a loan modification or a payment plan for credit obligations they can no longer afford but who then demonstrate their ability to handle the modified payments are higher credit risks. NAR urges FICO to study the credit risk performance of these consumers and modify the FICO formula accordingly.”

What is THE average credit score?

Last month, in what seemed like a big scoop over its rival news agencies, the Associated Press reported that, now, 25.5% of Americans have FICO scores below 600.  But, the score model in that report is a new score, FICO 8 (BEACON 09), which is not sanctioned by the two big housing finance agencies, nor even the one sold to consumers by the main scoring company.  The story stuck.  Following questioning by creditscoring.com, FICO (the company) removed FICO (the score) distribution charts from its website.

This month, rival news agency Reuters struck back.  On Friday, in her story “Scorning debt, consumers’ credit scores soar,” Helen Chernikoff wrote, “The average credit score rose to 704 in July, a level not seen since the first quarter of 1998, according to data that Equifax Inc (EFX.N), one of the largest U.S. credit bureaus, provided exclusively to Reuters.”

To what score model she refers is unclear.  In the article, 850 is the highest score on the scale, but there is no mention of the lowest.  So, to the average person, the model might look like the broad-based risk FICO credit bureau score BEACON 5.0 available to consumers at myFICO and required by Fannie Mae and Freddie Mac.

Or, it could be something else.

That is because the consumer reporting agencies play a childish game with numbers, creating credit scores with scales similar to that of the well-known FICO score, 300-850.  TransUnion even makes one, called Transrisk, that has exactly the same scale as the FICO–300 to 850.  There’s PLUS at Experian (330-830).  And, in the case of the company that is subject of the fabulous exclusive Reuters story, there is the Equifax Risk Score 3.0 (280-850).

Short sale, credit score

Subject: Short Sale
From: DM
To: greg@creditscoring.com
Date: 1/21/2009

I’m in the process of selling my home, and am likely going to sell it for less than I bought it for. Therefore, I will still owe the bank some money from my mortgage. They have offered to do a short sale of the home, in which they would absorb the difference. How will this affect my credit score?


Subject: Re: Short Sale, Fair Isaac statement, lending guidelines, points lost
To: DM
Date: 1/23/2009

See the Fair Isaac Q&A with the question, “Are the alternatives to foreclosure any better as far as my FICO score is concerned?”

For borrowing money for a house in the future, however, lending guidelines trump the credit score. For instance, Fannie Mae’s rule is outlined in its June 28 announcement: “Due to the increased incidence of preforeclosure sales, Fannie Mae is establishing a 2-year elapsed time period for reestablishing credit following completion of the action.” Fannie Mae is conducting pilot programs to test a potential new policy that quickens the preforeclosure sale (“short sale“) process.

Regarding the number of points lost, as with foreclosure (or any action), it depends on other factors. One columnist writes, “FICO spokesman Craig Watts said that the impact of a foreclosure on an individual’s score depends heavily on the payment history, length and number of credit trade lines in a consumer’s file, but ‘it is always significant.'” A big reason that there is little official information (although there are many opinions) on the true effect of a short sale is an old conundrum of credit scoring: The observer’s paradox.  The consumer’s mere knowledge that he is scored changes his behavior.