Student Loan Delinquencies Pushed Down the Average U.S. Credit Score

The national average FICO score fell in February, driven by federal student loan delinquencies, which started impacting credit reports for the first time in five years.

The average U.S. FICO credit score was 715 in February, one point lower than the previous month and two points lower than in April 2024. Tommy Lee, FICO’s senior director of analytics and scores, wrote that much of the drop could be attributed to student loan delinquencies.

During the COVID-19 pandemic, the federal government did not require payments on federal student loan payments until October 2024. Once payments were restarted, those who missed a payment did not see a hit to their credit until February because of the government’s on-ramp period.

An initial estimate by the Federal Reserve Bank of New York expected 9.7 million borrowers to see their credit rating drop because of delinquent student loan debt. According to FICO, only about 2.7 million borrowers had their delinquent student loans reported to the credit bureaus as of February.

However, more student loan delinquencies are expected to be reported in the next few months. Although their delinquency has not yet been reported, FICO said that about 5.4 million have not made a student loan payment since the pause ended.

For the first time since the pandemic began, delinquency rates on all loans are now above the pre-pandemic benchmark of 8.1% in January 2020. In February, the percentage of consumers with delinquency of more than 90 days in the last six months jumped to 8.3% from 7.4% the month before. That increase was also credited to student loan delinquency reporting, according to FICO.

Additionally, the hit of student loan delinquencies on the average FICO score may have been lessened due to lower credit card balances. The average credit card utilization, the percentage of a borrower’s total available credit being used, decreased from January to February. As consumers finally pay off their holiday spending, balances declined, improving the average FICO score and offsetting some of the declines caused by those with missed student loan payments.