Here's the Average Credit Score of High-Income Americans

Credit scores and wealth might seem unrelated, but the two often go hand in hand. A credit score is a measure of how well a person manages borrowed money. Those who pay their debts back on time and borrow small amounts in relation to their annual income typically have the highest credit scores.

Those with larger incomes tend to have the easiest time meeting this criteria. Below, we'll take a look at what the average credit score is for high-income Americans and what steps you can take to raise yours.

What's the average credit score among high-income Americans?

High-income Americans have a median credit score of 774, according to the Federal Reserve Bank of New York Consumer Credit Panel. This is 60 points higher than the national average credit score of 714.

It puts the typical high earner in the "very good" credit score range. Here's a closer look at the ranges for FICO® Scores -- the most popular credit scoring model used today.

A 774 credit score opens the door to lower rates on loans, which can come in handy in high rate environments like the one we find ourselves in now. It can also unlock better credit cards with bigger perks.

As I mentioned above, high earners tend to have an easier time achieving a high credit score. But people of all income levels can achieve very good or exceptional scores themselves by following a few principles.

How to boost your credit score

To boost your credit score, it helps to understand the five factors that affect your score.

Payment history

Payment history is the most crucial factor in your credit score. Paying bills on time is the most important thing you can do to raise your credit score. If you have a loan or a credit card, you can start with these. Otherwise, a secured credit card might be a good place to begin.

If you have trouble remembering to pay your bills, setting up automatic payments might help. If you lack the funds to pay your bills consistently, reach out to your lender to see if there's anything it can do for you.

Credit utilization ratio

Your credit utilization ratio is the ratio between the amount of credit you use and the amount available to you. For example, if your credit card has a $10,000 limit and you charge $2,000 to it one month, your credit utilization ratio is 20% for that month.

Ideally, you want to keep your credit utilization ratio under 30% whenever possible. You can do this by charging less to your credit cards or by paying your bill off twice per month. This works because lenders usually report your balance to the credit bureaus once per billing cycle.

Account age

Having a longer history of managing borrowed money raises your credit score. This is why it's generally not a good idea to close old credit cards even if you don't use them. The exception is cards that charge an annual fee you're not recouping in benefits each year. For example, if you have a travel credit card with a $100 annual fee and you're not earning at least $100 in rewards annually, it makes sense to close it.

Credit mix

Credit mix refers to the types of credit you have experience using. There are two: installment loans, like mortgages, and revolving debt, like credit cards. Having experience with both types of credit can boost your score. But this is such a small factor that it's not worth it for most to take out an installment loan they don't need just to increase their credit mix.

New credit history

Your recent credit behavior has a larger effect on your credit score than your old credit behavior. However, all your credit activity from the past seven years will affect your score to some degree. Some severe infractions, like bankruptcies, can affect your credit for a decade.

Improving your credit score takes time, but it's worth the effort you put into it. Even if you never achieve the 774 average score of high-income Americans, you can still significantly improve your access to financial products like loans and credit cards by getting yourself in the good or very good range.