In this article, we will list 25 states with the highest credit scores. If you want to skip our discussion about the credit bureau market, credit card debt, and FICO scores, visit the 11 States with the Highest Credit Scores.
The global credit bureau market has experienced rapid growth in recent years. It is a business that gathers and analyzes information about a person’s credit history and sells it to lenders for a fee. This information helps lenders in their decision to extend credit to individuals.
The main products of a credit bureau are credit scores, credit check services, and credit reports. The market stood at $122.4 billion in 2023 and is expected to reach $223.38 billion in 2028, growing at a compounding annual growth rate of 12.6% from 2024 to 2028. Going further, we will see technological advancement in data processing and digital transformation in banking and finance. The use of blockchain for identity verification is also likely to be prevalent in the industry soon.
This massive growth is propelled by an increased demand for credit cards. According to the Federal Reserve Bank, the application rate for credit cards increased from 26.5% to 27.1% between the years 2021 and 2022. In addition, persistent unemployment rates are increasing the demand for risk assessment, further adding to the growth of the industry. For perspective, according to the US Bureau of Labor Statistics (BLS), in November 2023, the national unemployment rate in the country was 3.7%.
One of the most common forms of credit that banks extend to individuals is credit cards. The use of credit cards is becoming increasingly prevalent, resulting in a significant increase in worldwide credit card debt. A whopping 6.8 billion credit cards were in circulation globally in 2020.
The increase in credit card usage, however, is not happening in a vacuum. Advancements in technology and the digitization of financial services have made it easier for consumers to access credit. Today, there is widespread adoption of credit cards by sellers and retailers, which further incentivizes their use. As a result, the total amount of credit card debt worldwide exceeded $1 trillion in 2020. The pandemic-induced downturn also lead to a 20% increase in credit card debt.
Two of the companies that have become synonymous with credit cards are Visa, Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA). These companies are financial intermediaries that facilitate electronic fund transfers throughout the world. These payment network processors provide a range of payment processing services, often through their branded credit and debit cards. As of 2022, Visa, Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA) have 52% and 24% market shares (in terms of purchase volume) respectively. Visa, Inc. (NYSE:V) reported a revenue of $23 billion in the fiscal year 2020. Similarly, Mastercard Incorporated (NYSE:MA) reported a revenue of $15 billion during the same year.
Circling back to credit rating, Fair Isaac Corporation (NYSE:FICO) is one of the most trusted companies in the market. Primarily, it is an analytics company that helps businesses make better decisions. Fair Isaac Corporation (NYSE:FICO), however, has focused its services on credit scoring. The company provides individual credit reporting, known as FICO credit scores. FICO is an acronym for Fair Isaac Corporation (NYSE:FICO).
FICO is a credit scoring mechanism that scores an individual’s creditworthiness from 300 to 850 with the following risk categories: excellent, very good, fair, and poor. A score of 800 to 850 lands an individual in the ‘excellent’ category. As of April 2023, only 1.7% of Americans with a FICO have a perfect score of 850. A score of 740 to 799 lands an individual in the ‘very good’ risk category. It is essential to note that in most cases, a score of 760 is enough to get the same financial benefits as those that come with 850. Scores from 670 and 739 are categorized as ‘good’, whereas those between 580 and 669 are categorized as fair. Scores below 579 are categorized as poor, with 300 being the lowest FICO score.
The average FICO credit score for the United States in 2023 was 718. This shows that even with the rising credit card debt, the average risk category in the country is ‘good’. Mississippi is the state with the lowest average FICO score of 680, which still falls in the ‘good’ category.
With that backdrop, let’s look at the 25 states with the highest credit scores.
A technician inserting a credit card into a point-of-sale machine for identity authentication.
Methodology
To curate our list of the 25 states with the highest credit scores, we used FICO’s credit scores for quarter 3 of 2023. We sorted the states according to their average credit scores and selected the top 25 for our list. We also found that some states have the same credit scores, so we used their populations as tie-breakers. So, if states A and B have the same credit scores but state B has a higher population, it ranks higher on our list.
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25 – Alaska
Average FICO Score of Individuals in 2023 – 722
Alaska is one of the states with the highest credit scores. Its FICO credit score of 722 is significantly higher than the national average of 718.
24 – Rhode Island
Average FICO Score of Individuals in 2023 – 722
The average FICO score in Rhode Island has been increasing steadily over the last few years. It was 713 in 2019, 719 in 2020, and 722 in 2023. The median household income of Rhode Island in 2022 dollars was $81,370, which was slightly higher than the national median household income of $75,149.
23 – California
Average FICO Score of Individuals in 2023 – 722
The average FICO credit score in California in 2023 was 722, landing it in the 23rd spot on our list of the 25 states with the highest credit scores. It has a median household income of $91,905 in 2022 dollars, which is significantly above the national average of $75,149. The high income in the state contributes significantly to overall high credit scores.
22 – Kansas
Average FICO Score of Individuals in 2023 – 723
Kansas is one of the states with the highest credit score. Its credit score of 723 in 2023 was two points higher than the credit score of 721 in 2022. However, it is worth noting that the median household income of Kansas in 2022 dollars of $69,474 is lower than the US median household income of $75,149.
21 – Pennsylvania
Average FICO Score of Individuals in 2023 – 723
Pennsylvania is 21st on our list of the 25 states with the highest credit scores. Its per capita income of $41,234 in 2022 dollars is only slightly lower than the national per capita income of $41,261.
20 – Wyoming
Average FICO Score of Individuals in 2023 – 724
Wyoming is among the top 20 states with the highest credit score. It saw a 1-point increase in its FICO credit score in 2023 compared to the last year.
19 – New Jersey
Average FICO Score of Individuals in 2023 – 725
New Jersey is 19th on our list of the 25 states with the highest credit score. Its FICO score saw a massive increase of 7 points in the year 2020, after which it has been steadily increasing.
18 – Connecticut
Average FICO Score of Individuals in 2023 – 726
The median household income of Connecticut in 2022 dollars of $90,213 is significantly higher than the national figure of $75,149, contributing to the overall high credit scores of its residents. Its FICO score increased by one point in 2023.
17 – Idaho
Average FICO Score of Individuals in 2023 – 729
Idaho has a FICO score of 729, landing it in the 17th spot on our list of the states with the highest credit scores. The average FICO score of Idaho is 3 points higher than the last entry on this list.
16 – Iowa
Average FICO Score of Individuals in 2023 – 730
With an average FICO score of 730 in 2023, Iowa is 16th on our list of the states with the highest credit score. It is interesting to note that although Iowa ranks high on this list, its median household income of $70,751 in 2022 dollars is lower than the national figure of $75,149.
15 – Maine
Average FICO Score of Individuals in 2023 – 731
Maine’s average FICO score increased by 3 points in 2023. The state has an even lower median household income compared to Iowa ($68,251 in 2022 dollars).
14 – Nebraska
Average FICO Score of Individuals in 2023 – 731
Nebraska is 14th on our list of 25 states with the highest credit score. Its average FICO score of 731 in 2023 is a one-point increase compared to 2022.
13 – Utah
Average FICO Score of Individuals in 2023 – 731
Utah is one of the 25 states with the highest credit score. Its median household income of $86,833 in 2022 dollars is significantly higher than the national average of $75,149.
12 – Colorado
Average FICO Score of Individuals in 2023 – 731
Colorado is 12th on our list of the 25 states with the highest credit score. Its score of 731 is significantly higher than the national average.
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Disclosure: none. 25 States With the Highest Credit Score is originally published on Insider Monkey.