Adam Brennan
Written by Adam Brennan
Last updated: Oct.26,2021

During the Pandemic, Credit Scores Rose? Why?

FICO credit scores continued to soar during July reaching an average of 711 (a record high), despite a pandemic which is 5 points higher than in 2019. Considering millions of Americans struggle to pay their bills on time, this seems counterintuitive. The average credit score shouldn't be taken as a prediction of the economy's future, however - rather a gauge of where it was. 

In the wake of the pandemic, a few factors contributed to credit scores going up. Despite this, consumers' credit scores have not yet been affected by the coronavirus pandemic, but it is expected that they will within the next six months. In the past 10 years, credit scores have steadily gone up.


What accounts for the rise in average credit scores?

  • There has been a decline in consumer debt.

About 30% of your credit score is determined by the amount of debt you have. Credit card debt dropped to historic levels during the pandemic. In January 2020, consumers on average owed $6,943 on credit cards compared to $6,004 in July 2020. It is no surprise that people take on less debt, either as a result of lower opportunities to spend or through intentional cutbacks. Either way, credit scores have improved. 

  • The number of late payments is down.

Staying on top of your bills accounts for 35% of your score, so staying current is essential. In the last six months before COVID-19, 8.1% of people were behind in their payments by more than 90 days. The government relief program for coronavirus was partially responsible for a 7.3% percent decline in July.

As per Jordan van Rijn CUNA Senior Economist, banks and credit unions work side-by-side with consumers to help reduce delinquencies. These efforts include skipping payments, modifying loans, deferring payments, forbearing payments, and other means to prevent consumers from having a negative impact on their credit scores.

Rijn further states that the vast majority of credit unions offer loan modifications to their members. These efforts help consumers avoid delinquencies and charge-offs, as well as providing families with extra cash to pay down their credit card debt or past-due bills.

Your Credit Score Adjusts Slowly

As a result of the pandemic, credit scores did not increase. Several major economic changes have turned out to have little impact on credit scores. 

It takes a long time for the impacts to be seen. As an example, we can look at the Great Recession. Almost one year later, in 2009, credit scores dropped to their lowest point. 

According to Rijn, a government stimulus package would prolong the current increase in credit scores. American' s credit scores will suffer more if they wait too long for relief. 

Rijn adds that we may need to wait past the elections to see progress. It would mean several months of millions of Americans receiving no supplementary direct stimulus payments and no relief from extended unemployment benefits.

Quick Summary

A pandemic could lead to a decrease in credit scores. With government relief slowing things down, it' s hard to predict when they' ll occur. Economic changes have a slow effect on credit scores. Scores will eventually drop because of this. Ultimately, the economy will recover and be helped by the stimulus packages and this will shape credit scores post-pandemic.

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