Credit scores will vary depending on how debt is managed. The median FICO score for homebuyers has risen to 735, according to Realtor.com® data.
The average credit score in the U.S. is 715, according to FICO’s Score Credit Insights report.
That number has decreased by two points since 2024 because of increases in credit utilization and delinquency.
The FICO study found that states with lower average scores have experienced greater score changes in recent years.
Meanwhile, states with higher average scores generally had smaller average score decreases in the last year.
FICO’s report reveals a strong positive correlation (+0.56) between a state’s score change from last year and its average score.
New York comes in with the state that has the highest average FICO score at 740. The state with the lowest average FICO score is Mississippi (677).
States with higher average scores had a larger percent of the population benefiting in the current economy, while states with lower average scores had a larger percent of the population struggling in the current economy.
Inflation and a slow job market have forced many Americans to rely on credit to pay bills and other expenses.
Paying down debt in a timely manner will help to boost one’s credit score. FICO found that 56% of consumers are more likely to pay their mortgage than a personal loan. For consumers with open mortgages and personal loans, the mortgage 90-plus-day delinquency rate in 2023 to 2025 was 13% while the bank card figure was 21.4%.
Student loan debt is also contributing to low credit scores. After a pause in student loan payments and then a restart, any delinquencies were subject to a grace period, but now partial or missed payments are affecting scores.
Securing a home loan
Lenders will be looking at credit scores when it comes to securing a home loan. The higher the credit score the better the mortgage rate a borrower will secure.
“Different lenders and loan types have different credit score requirements,” explains Hannah Jones, senior economic research analyst at Realtor.com.
“Generally, borrowers with a low credit score will be limited in the type of loan they can take out, and may have additional requirements on down payment size or minimum income level.”
A conventional loan requires a minimum credit score of 620. Conventional loans, such as a 30-year fixed mortgage, are not insured by a government agency and follow certain standards set by the government-sponsored entities Fannie Mae and Freddie Mac. These are the most commonly used mortgage loans.
If a credit score is low, government-backed loans allow for more leeway. A Federal Housing Administration loan requires a minimum credit score of 500, if you make a 10% down payment on your home purchase. If you put down less than that, the minimum credit score required is 580.
“It’s important to be aware of where your credit score stands because it directly impacts your ability to purchase a home or a car. And determine what rate you may get through a lender or mortgage broker,” Jessica Vance, real estate agent and mortgage broker, tells Realtor.com.
