Credit Breakdown of an Average Borrower

Christel Deskins

Your credit score, level of income and amount of outstanding debt are all crucial elements that make up your financial profile. Understanding these numbers helps you determine what credit you have access to, what you can afford and what obligations you owe. But sometimes it helps to get the bigger […]

Your credit score, level of income and amount of outstanding debt are all crucial elements that make up your financial profile.

Understanding these numbers helps you determine what credit you have access to, what you can afford and what obligations you owe. But sometimes it helps to get the bigger picture of what is “normal,” or the average, so you can see how you measure up and any progress that you can make.

So you can see how your numbers stack up to the average American consumer, CNBC Select asked Experian, one of the three main credit bureaus, to share a snapshot of the average borrower data across U.S. consumers. Here is what we found.

Snapshot of the average borrower: Their credit score

Experian’s most recent data from Q1 2020 shows that the average borrower in the U.S. has a 703 FICO credit score.

On the FICO credit score scale ranging between 300 on the low end to 850 on the high end, a 703 falls under “good.”

  • Poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Exceptional: 800 to 850

Having a 3-digit score that falls within this “good credit” range is worthwhile and it can certainly make a difference when applying for a loan or new credit card. In fact, a good credit score is essential if you want to qualify for cards that offer competitive rewards and generous welcome bonuses.

For example, the recently launched Chase Freedom Flex℠ made the CNBC Select ranking of best credit cards for good credit because of its sign-up offer: New cardholders earn $200 cash back after spending $500 on purchases in their first three months. That’s almost half your money back into your wallet.

Chase Freedom Flex℠

Chase Freedom Flex℠

On Chase’s secure site

  • Rewards

    5% cash back on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year, 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate (then 1%), 5% cash back on travel booked through the Chase Ultimate Rewards®, 3% cash back on dining and at drug stores, 1% cash back on all other purchases

  • Welcome bonus

    $200 cash back after you spend $500 on purchases in your first 3 months from account opening

  • Annual fee

  • Intro APR

    0% for the first 15 months on purchases

  • Regular APR

    14.99% to 23.74% variable

  • Balance transfer fee

    Either $5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

  • Credit needed

Pros

  • No annual fee
  • Generous welcome bonus
  • Opportunity to earn up to 5% cash back in select categories upon activation
  • Rewards can be transferred to a Chase Ultimate Rewards card
  • Long intro 0% APR period for purchases

Cons

  • Bonus categories must be activated each quarter
  • 3% fee charged on foreign transactions
  • Estimated rewards earned after 1 year: $814
  • Estimated rewards earned after 5 years: $2,647

Rewards totals incorporate the cash back earned from the welcome bonus

And if you want a credit card that lets you take advantage of interest-free financing, the Citi Simplicity® Card offers an introductory 0% APR for the first 18 months on both purchases and balance transfers (after, 14.74% to 24.74%). Though we recommend always paying off your balance on time and in full every month, this helps provide some wiggle room for those big purchases.

Citi Simplicity® Card – No Late Fees Ever

Citi Simplicity® Card - No Late Fees Ever

Information about the Citi Simplicity® Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

  • Welcome bonus

  • Annual fee

  • Intro APR

    0% for the first 18 months on purchases and balance transfers

  • Regular APR

    14.74% to 24.74% variable

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

Pros

  • 18 months of no interest on purchases and balance transfers
  • No annual fee
  • Balances can be transferred within 4 months from account opening

Cons

  • 3% foreign transaction fee
  • No rewards program
  • Transfer timeline: Balances must be transferred within 4 months from account opening
  • Estimated total fees and interest on debt repayment: $595

Snapshot of the average borrower: Their income and debt levels

The average borrower has an estimated $88,255 yearly income and an average $94,081 in total debt, according to Experian’s Q1 2020 data.

As expected, these numbers fall right between prime and subprime borrower data. Prime borrowers have an average $98,206 yearly income and $110,110 in total debt, while subprime borrowers have an average $68,567 yearly income and $55,135 in total debt.

We can analyze from these numbers that those with higher credit scores also have more income and debt obligations. Having debt may not be ideal, but when you pay your monthly bills for those obligations every month on time, that can help your credit score. Not to mention, having a mix of credit (credit cards, student loans, car payments, a mortgage) helps improve your score because it shows that you can manage different types of debt.

Experian provided the below additional data for the average consumer:

  • Credit cards: 4
  • Credit card balance across all cards: $6,144
  • Additional retail / store credit cards: 3
  • Retail / store credit card balance across all cards: $1,162
  • Student loan balance: $37,161
  • Auto balance: $19,527
  • Mortgage balance: $207,402

As you observe the data above and compare to your own, know that everyone’s financial picture is different and the numbers don’t tell the whole story.

A good credit score is something smart to strive for, but you won’t get there by taking out a bunch of credit cards and loans. The key is to have enough credit that you can manage, given your own personal income and debt obligations, and that you borrow strategically according to your needs.

Learn more: From super-prime to deep subprime, here are the 5 credit score categories you need to know

Information about the Citi Simplicity® Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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