Credit Scores in Florida Are Increasing, But Still Lag the Nation as a Whole

Good news, Florida — your credit scores are rising, on average. But experts say many Floridians face unusual challenges and still have some catching up to do.

Credit reporting agency Experian found that Americans’ credit scores rose to a record high last year, an increase of four points from a year prior. Florida residents saw bigger gains, with their scores rising an average of six points, but Florida is still beat out by a majority of states.

The average Florida FICO score is 701, compared to the national average of 714, according to Experian. For FICO’s 300-850 scale, while 701 is in the “good” credit score range, it falls short of the 740 points most lenders consider “very good” and the 800 points classified as “excellent.”

This doesn’t surprise Lorenzo Varon, a Miami-based bilingual credit – HUD certified housing counselor at Money Management International, a nonprofit credit counseling organization.

Varon says he works with many clients whose credit scores fall below 600. “Many of these people have collection accounts or haven’t paid their credit cards… especially now, with this economy.”

Varon’s clients are enrolled in two- to four-year debt management programs that help them pay down outstanding balances and acquire the financial literacy skills they need to avoid falling back into a debt trap afterward. He says many can increase their score by 100 or so points, which can be the difference between getting credit at a favorable rate versus not being able to borrow money at all.

Why Florida’s credit scores still fall behind

Varon says there are a few reasons why his Miami-area clients and Florida residents, in general, face an uphill battle when it comes to getting and maintaining high credit scores. South Florida’s reputation as a haven for retirees and home to many Latin American immigrants creates some unique financial dynamics.

The rising costs of housing hit senior citizens on fixed incomes especially hard. Varon notes, “These people are struggling with the rent, with utility bills, and — for the ones who own houses — what they owe in taxes.”

The current inflation rate and recent spike in energy prices is sure to contribute to more financial pain in the future, he predicts, particularly as hot weather – and the use of air conditioning – lingers into late summer.

For many immigrant families who depend on multiple income streams, one wage earner suffering a serious injury or prolonged illness — which happened in droves with COVID-19 — can quickly cause a destabilizing financial domino effect.

Varon says many recent arrivals to the U.S. have a bare credit history and lack familiarity with (or are wary) of the financial mainstream. Without access to conventional credit products, they are forced to turn to extractive payday lenders, for whom a small debt can be a cash cow — and a financial crisis for the debtor. One client, he said, was in a tight spot and borrowed $600 to cover her bills, not realizing that the interest accrued so quickly and at such a high rate that she ultimately owed triple what she had borrowed.

There’s also the broader economic climate to consider: Varon warns that, with interest rates rising, the credit card debt that people barely stay on top of today will become overwhelming in the near future.

This means there’s never been a better time to make sure that this key part of your personal finance profile is in good shape. But while most people realize that a serious financial crisis like a foreclosure or being the victim of identity theft can be a major credit hit, experts like Varon say there also are plenty of other small things that can hurt your credit score, as well.

Financial mistakes that might seem minor to you can be viewed in a very different light by credit bureaus — and, as a result, by lenders.