Most people think of credit scores as a number.
Lenders know it’s a signal: but often the wrong one, or at least an incomplete one.
What’s more interesting is how that signal is shifting underneath us… and what it means for capital allocation, pricing, and risk selection going forward.
Financial Intelligence Series
Credit Score Primer
The Relationship Between Income and Credit
National Average FICO Score (2024)
715
The U.S. average has risen 26 points since 2010 and has not declined on an annual basis for eleven consecutive years — reflecting broad improvement in consumer credit behavior despite rising debt levels.
Total U.S. Consumer Debt (Q4 2025)
$17.7T
Credit card balances alone reached a record $1.21 trillion. Yet delinquency rates remain below pre-2008 levels — illustrating the bifurcated economy where high earners manage debt well while lower-income households face increasing strain.
Income & Credit Correlation
Median FICO Score by Household Income Tier
Income is not a direct input to any FICO or VantageScore model. However, the Federal Reserve Bank of New York found a strong indirect correlation — higher incomes enable lower credit utilization ratios, more consistent payment histories, and access to higher credit limits, all of which significantly influence scores.
Low Income
658
< 50% of area median income
Fair rangeModerate Income
692
50% – 79% of area median
Fair rangeMiddle Income
735
80% – 120% of area median
Very GoodHigh Income
774
> 120% of area median
Very GoodMedian score by income tier
FRBNY Consumer Credit Panel / Equifax · Income tiers per FFIEC methodology
FICO score tiers
Score ranges and approximate U.S. consumer share
| Tier | Range | U.S. share |
|---|---|---|
| Exceptional | 800–850 | 24.0% |
| Very Good | 740–799 | ~17% |
| Good | 670–739 | ~30% |
| Fair | 580–669 | ~13% |
| Poor | 300–579 | 16.3% |
71.2% of Americans hold a Good score or higher. Approximately 26M adults are "credit invisible" — no score at all.
Credit score distribution by income tract — Eighth Federal Reserve District (2025 Q1)
Percentages of adults by subprime / prime / super-prime classification across census tract income levels. Source: St. Louis Fed / FRBNY Consumer Credit Panel / Equifax Q1 2025.
Analysis
Key Findings
Credit utilization
Higher incomes enable lower utilization ratios — the second-most-important FICO factor (30% of score). Consumers with Very Good scores average 12.4% utilization vs. 32.6% for those in the Good range. Average utilization nationally surged to 36.1% in early 2026, up from 21.3% in 2024. — Experian; WalletHub / TransUnion
Payment consistency
Payment history represents 35% of FICO score — the single largest factor. Income volatility in lower-income households materially increases the risk of missed payments. A median score of 658 for low-income borrowers puts many below the 720 threshold lenders typically require for favorable terms. — Federal Reserve Board; FRBNY (2020)
Credit limit constraints
Lower-income applicants typically receive smaller credit limits, making it easier to reach high utilization even with modest balances — creating a structural disadvantage that perpetuates lower scores and limits access to affordable credit products. — LendingTree; Consumer Federation of America
Correlation is moderate, not deterministic
The Federal Reserve Board found household income is only moderately correlated with credit scores. Cross-sectional income variations account for a modest fraction of score variation — many lower-income consumers maintain good or excellent credit through disciplined payment behavior. — Beer, Ionescu & Li, Fed FEDS Notes (2018)
Geographic stratification
Average scores range from 725 in Minnesota to 677 in Mississippi — a 48-point national spread. In low-income census tracts, over 53% of adults carry subprime scores; in upper-income tracts, 67.5% hold super-prime scores of 720+. — FICO; St. Louis Fed Q1 2025
Credit invisibility
Approximately 26 million U.S. adults (roughly 10%) have no credit record whatsoever — they are "credit invisible." An additional 19 million have records too thin or outdated to generate a score, disproportionately concentrated in lower-income and minority communities. — Consumer Financial Protection Bureau
Sources
Federal Reserve Bank of New York, The State of Low Income America: Credit Access & Debt Payment (2020, 2022) · Board of Governors of the Federal Reserve System — Beer, Ionescu & Li, "Are Income and Credit Scores Highly Correlated?" FEDS Notes (August 2018) · Federal Reserve Bank of St. Louis / FRBNY Consumer Credit Panel / Equifax, Access to Traditional Credit in the U.S. and the Fed's Eighth District (Q1 2025) · Experian, What Is the Average Credit Score in the U.S.? (2024–2025) · FICO Credit Insights Report (2025–2026) · Consumer Financial Protection Bureau (CFPB) — Credit Invisibility Study · LendingTree Credit Score Statistics (2024) · WalletHub / TransUnion Average Credit Score Statistics (2026)
Registered Representative of and Securities Products offered through BA Securities, LLC. Member FINRA SIPC. LEHNS Capital Advisory, LLC and BA Securities, LLC are separate, unaffiliated entities. The information contained herein is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. Past performance is not indicative of future results.