• Thomas Cecil

How Many People Have Bad Credit?

Your credit score plays an integral role in your financial success. The major credit bureaus keep credit files on almost all Americans, and these three-digit numbers that they produce are designed to predict the likelihood that you will meet your financial obligations. The most popular credit scoring model is the FICO model. And importantly, the Consumer Financial Protection Bureau recently published a report that contained a breakdown of the percentage of Americans that are in each tier of credit scores. In this article we provide a rundown of the data and the ways you can build up and maintain your credit score if it is subpar.

FICO Score Tiers

FICO offers their own credit guidelines—exceptional, very good, good, fair and poor. However, CFPB segments FICO Scores differently, breaking them down into tiers that a traditional lender might use—superprime, prime, near-prime, subprime, and deep subprime. Anyone in the superprime or prime tiers, with a FICO Score above 660 is considered to have good credit. The following table provides more information of how the credit scores of American adults break down:

Credit Tier, % of Adults by FICO Scores

Superprime (720-850), 42%

Prime (660-719), 12%

Near-prime (620-659), 6%

Subprime (580-619), 6%

Deep subprime (579 or lower), 13%

Thin or stale score file, 11%

Credit invisible, 11%

It is very important to note that this chart includes a total of 22% of American adults that do not have a FICO Score. As a reminder, in order to be able to generate a valid FICO Score, there are three things that must be true:

  1. You must have an account on your credit report that has been open for at least six months

  2. This account must have been reported to the credit bureau within the last six months

  3. Your credit report cannot indicate that you are deceased.

To put things simply, in order to have a FICO Score, you need to use your credit and be alive.

However, including 22% of the population that does not have a FICO Score does distort the data. The following table provides a breakdown if we were to just consider the American adults who do have FICO Scores:

Credit Tier, % of Adults

Superprime (720-850), 53%

Prime (660-719), 16%

Near-prime (620-659), 8%

Subprime (580-619), 7%

Deep subprime (579 or lower), 16%

To summarize, more than half of American adults with credit scores are in the superprime credit tier and close to 70% have scores that would generally be considered good by CFPB standards.

Improving Your Credit Score

If you fall into the approximately 30% with credit that isn’t considered to be good, there are a few ways to improve your credit score. Here’s how:

  • Pay your bills on time: Payment history is the biggest component in determining credit score. As long as you stay on top of your payments, your credit score will rise.

  • Lower your credit utilization rate: To raise your credit score, you must keep your credit card balances low. The credit utilization rate measures the amount of your credit limit that is being used and accounts for 30% of your credit score, making it the second largest component of your credit score. Most experts recommend that you use 10-30% of the limit on any credit card, to help build up your credit score. and much lower is much better.

  • Keep credit cards open: Unless your credit card is charging you an unbearable annual fee or your credit card is new, it is best to keep it open. Closing unused credit cards will result in your credit utilization rate rising, resulting in a damaged credit score.

  • Look to transfer or refinance existing debts: Being unable to pay off debts due to high-interest payments, can have large negative impacts on your credit score. However, by refinancing your loans you can have lower monthly payments helping you earn a stronger credit score. Many mortgage lenders allow borrowers to refinance their loans at a lower interest rate after their seasoning period or the time where you can not refinance a loan. Ask your mortgage lender when this period ends and shop around for the interest that is best for you. As always, make sure to check any and all terms, as depending on the additional refinancing costs and the length of the loan, refinancing can have adverse consequences.


Approximately 30% of eligible Americans have what is considered to be a bad credit score. And this can be a huge hurdle for someone: poor credit can become a roadblock that stops you from getting the loan you need to buy a home, finding financing to purchase a car, or qualifying for the credit card that is right for you. The good news is that there are ways to improve your credit, by notably paying your bills on time and lowering your credit utilization.

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