What About Those with Credit Scores in the Middle? Taking the Minimum Payment to the Max

What About Those with Credit Scores in the Middle?

Examining consumers on opposite ends of the credit-score scale reveals some of the largest categorical disparities, but many of us fall somewhere in the middle. So how did consumers in the middle range—PLUS Credit Scores^SM from 660 to 719—fare? A study by the Experian National Score Index revealed the following:

The results from "A Tale of Two Credit Scores" revealed some significant differences between consumers with higher and lower scores, so one might reasonably expect the middle group’s data to fall somewhere between these results. Yet, of the five categories above, only Average Number of Late Payments falls in the middle of the other two groups. In all other categories, consumers in the middle lead the pack. This is especially true when it comes to debt, with the numbers indicating those in the middle may be overextending themselves.

Consumers with mid-range credit scores lead the category of debt in three categories: Average Monthly Payment, Average Debt, and Average Debt Usage. The monthly payment of these consumers is over three times that of those with lower credit scores, and 30% higher than those with the highest scores. But the real indicator that these consumers may be overextended is the fact that they are using, at a hefty 48.3%, nearly half of their available credit on revolving and installment accounts. And, as pointed out in "A Tale of Two Credit Scores," a high balance-to-limit ratio can adversely affect a person’s score.

An average of nearly four inquiries per person over the past six months indicates that consumers in this group may be looking for more credit than those in the other two groups. Consumers in this group have opened more new accounts over the past twelve months (1.71 per person) than either of the other two groups.

In conclusion, this group of consumers appears to have higher debt and a higher balance to limit ratio than the consumers in the lower scoring group, however they make up for this by having a lower incidence of late payments and also fare well in other categories such as number of collections and average account age. These are all good indicators of how responsible credit behavior is generally reflected in one's credit score.