What Is the Average Credit Score for a 24-Year-Old?

A credit score is a numerical representation of creditworthiness, indicating the likelihood of repaying borrowed money on time. This three-digit number, typically ranging from 300 to 850, is dynamic, influenced by financial behaviors and reported credit activities. Lenders, financial institutions, and some service providers utilize these scores to assess risk and determine the terms of financial products or services offered.

Understanding the Average Credit Score for 24-Year-Olds

The average credit score for a 24-year-old in the U.S. is 681. This score is considered “good” within the FICO scoring model (670-739). While a 681 score indicates a sound financial standing, it is 36 points lower than the overall U.S. average FICO score of 717. VantageScore data shows the average for Gen Z (born 1997+) at 667, within their “good” or “prime” range.

Credit scores tend to increase with age, and the average for 24-year-olds reflects their shorter credit histories. Many in this age group are managing their first credit types, such as student loans or credit cards. It takes around six months of credit activity for bureaus to generate an initial credit score.

Key Factors Shaping Credit Scores

A credit score is determined by several factors, each with a specific weight. Payment history is the most impactful, accounting for 35% of a FICO Score and up to 40% of some VantageScore models. This assesses timely payments on all credit obligations; late or missed payments significantly harm scores. Consistent on-time payments demonstrate reliability to lenders.

Credit utilization (amount of credit used compared to total available) is the second most influential factor, making up 30% of a FICO Score. Lenders prefer this ratio below 30%, as a lower percentage indicates responsible debt management. For instance, if an individual has a total credit limit of $10,000 and carries a balance of $2,500, their utilization is 25%, which is favorable.

Length of credit history contributes 15% to FICO Score and around 20% to VantageScore models, often combined with credit mix. This considers the age of oldest, newest, and average age of all accounts. A longer history of responsible credit management signals stability to lenders. Credit mix, or the types of credit used, accounts for 10% of a FICO Score, considering a blend of revolving credit (like credit cards) and installment loans (such as student or auto loans).

New credit, including recent applications and newly opened accounts, makes up 10% of a FICO Score. Each application results in a “hard inquiry,” which can temporarily lower a score. Opening multiple new accounts in a short period can be viewed as risky, especially for those with limited credit history. Such activity can also reduce the average age of accounts, impacting the length of credit history factor.

Strategies for Building and Improving Credit

Consistently making all payments on time is the most impactful action for credit improvement. Setting up payment reminders or automatic payments can help ensure bills are paid by their due dates. Even if an individual has past late payments, establishing a pattern of on-time payments over time can significantly improve their score.
Maintaining low credit utilization is another strategy. Individuals should aim to keep their credit card balances well below 30% of their available credit limits. Paying down existing balances and avoiding maxing out credit cards demonstrates responsible financial management. This practice shows lenders that an individual is not overly reliant on credit.
Establishing a diverse credit mix over time can also be beneficial, though it is a less significant factor. This involves having a combination of different account types, such as credit cards and installment loans. However, it is not advisable to open new accounts solely to diversify credit, as new inquiries and a reduced average age of accounts can initially lower scores.
Becoming an authorized user on a trusted individual’s established credit account can provide a low-risk way to build credit history, as long as the primary account holder maintains good payment habits.
Regularly reviewing credit reports is important to identify and dispute inaccuracies that could negatively impact scores. Individuals are entitled to a free copy of their credit report annually from each of the three major credit bureaus.
When considering new credit, it is prudent to apply only for what is needed and to space out applications to avoid multiple hard inquiries in a short period.
For those with no credit history, starting with a secured credit card can be an effective way to begin building a positive credit profile, as these are typically reported to credit bureaus.

The Importance of a Strong Credit Score

A strong credit score holds substantial practical significance in an individual’s financial life. It directly influences the ability to qualify for various loans, such as auto loans and mortgages, and often dictates the interest rates offered. A higher score signals lower risk to lenders, which can translate into thousands of dollars in savings over the life of a loan due to lower interest charges. For instance, a small increase in a mortgage credit score can lead to significantly lower monthly payments.
Beyond traditional lending, a good credit score impacts other aspects of daily life. Landlords and property management companies frequently check credit scores to assess a prospective tenant’s reliability in paying rent. A lower score might necessitate a higher security deposit or even result in a denied rental application.
Similarly, many insurance companies utilize credit-based insurance scores to help determine premiums for auto and home insurance, with higher scores potentially leading to lower rates.
Furthermore, a strong credit score can lead to more favorable terms for utility services, sometimes allowing for reduced or waived security deposits.
While less common, some employers may review credit information as part of their background check process, particularly for positions involving financial responsibility. Establishing and maintaining a robust credit score early in adulthood provides a foundation for greater financial flexibility and access to more advantageous financial products and services throughout life.