Consumers in Top Credit Ranges Have Highest Debt

Most Consumers Believe High Debt Equals Low Credit Scores

Overwhelmingly, survey respondents—80%—said they believe that having high debt would hurt credit scores.

Similarly, they thought people with top credit scores would carry less debt than people with lower scores: 51% believed people with a score between 740 and 850 would have less debt than people with scores at the lower end of the scoring scale (300 to 670). Just 29% thought people with higher scores would have more debt.

Consumers With Top Credit Scores Have Higher Average Debt

When looking at average debt compared with FICO^® Score ranges, the trend is clear: As credit scores get higher, total debt grows. People with average FICO^® Scores in the "exceptional" range of 800 to 850 have the highest average total debt, carrying $136,801 in Q2 2019, according to Experian data.

*Source: Experian Q2 2019 data

Credit scores and the ranges they fall in are important factors when taking on new debt. Often, people in lower credit score ranges have trouble obtaining new loans. People in the lowest credit range, with scores from 300 to 579, carried $38,324 in total average debt in Q2 2019, according to Experian data. That's less than one-third of the total debt carried by consumers in the top credit range and could indicate the difficulty these consumers experience when applying for loans or credit cards.

But while lower credit scores can be a barrier to taking out new credit, the trend also shows that once you have high debt amounts, it's possible to simultaneously maintain a good credit score.

States With Highest Average Debt Have Above Average Credit Scores

The five states where consumers carry the most debt also have average or above average FICO^® Scores. The average FICO^® Score in the U.S. was 703 in Q2 2019, and the total average debt carried by American consumers was $92,479.

*Source: Experian Q2 2019 data

American Cities With the Most Debt Carry High Credit Scores

Among the states and cities with the highest debt amounts in the U.S., average FICO^® Scores were consistently average or above average. In some cases, cities with top debt even had average FICO^® Scores in the top 10% of all cities in the U.S. This trend was also true for individual consumers across the country.

Two of the five cities with the highest average debt—Danville and San Ramon, both in California—had average FICO^® Scores in the top 10% of any city in the country.

*Source: Experian Q2 2019 data

While high debt amounts are not a requisite for having a good credit score, these data findings show that if you properly manage debt, it doesn't have to bring your credit score down.

Paying on Time Is Key to High Credit Scores

While survey respondents thought debt played a serious role in credit scores—many even thinking it had a negative effect—36% reported they felt carrying debt was not problematic as long as all payments were made on time.

Indeed, no credit score can reach the top range if a borrower doesn't pay their bills on time. Payment history is the most important aspect of calculating a credit score, and even one late or missed payment can have a serious impact on scores. Borrowers looking to manage a high amount of debt while maintaining a good score can do it as long as they make all debt payments on time and know all the factors that affect credit scores.