The Average American Credit Score And What It Means To You

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Credit is a tool, not a gift—use it wisely, and it will work for you. – Jean Chatzky

You probably know that your credit score will be checked when applying for a loan, but did you also know it may be checked when getting insurance, renting an apartment, or applying for a job? It’s true. What is the basis for determining your score, and what’s the average American credit score? Knowing this will let you know how you compare to other people in the US, for better or worse. Almost everybody has heard about credit scores, and they know it has something to do with your previous creditworthiness, but few people understand how the scoring system works.

Credit is a tool, not a gift—use it wisely, and it will work for you.
– Jean Chatzky

Credit scores range from a low of 300 up to a perfect score of 850. Obviously most people will end up somewhere in between those numbers. Basic math tells us that the average of 300 and 850 is 575, but actually, the average American credit score is quite a bit higher, hovering right around 690. However, some experts are predicting an overall decline in that average as more and more people are affected by the state of the economy.

While 690 sounds like it’s a fair amount above the expected average, it really isn’t all that great if you’re interested in getting the best deals from the majority of lenders. In fact, most lenders will look at your credit score before deciding whether they lend money to you or not, if collateral will be required from you, how long the term of your loan will be, and the rate of interest they will charge you. It goes without saying that the lower your credit rating, the more it will cost you in the long run.

A credit score is like a report card for adults—pay your bills on time, and you’ll pass with flying colors. – Unknown

Because many lenders operate independently, there is no all-encompassing rule as to what number will give you the best deal. However, based on several studies, the magic number, in most cases, is a credit score that’s at 720 or higher. Therefore, having an “average” score of 690 can actually hurt you financially, by preventing you from getting the best possible terms. Again, each lender is different, so it always pays to shop around. On the other hand, if your score is somewhat below normal (usually 620 or lower) you will have to look harder to find anybody that’s willing to give you a loan at all. Though, it is still possible, your rates will be higher when compared to those with a higher score.

There are some experts that predict the lenders will eventually have to give more loans to those with lower credit scores. After all, they only make money when they lend money out, and if too many people have lower scores, they will need to reconsider their policies if they wish to remain profitable.

“The cost of bad credit is higher than you think. It follows you everywhere.”
– Kevin O’Leary

If you plan on getting a new job, a loan, car or insurance, then you need to do whatever you can to get your score higher. The average American credit score should be thought of as the lowest end of the scale (not 300) if you want to get the best rates.

Improving your credit score takes time and consistency, but with the right strategies, you can see positive changes. Here are five key tips to boost your credit score:

1. Pay Your Bills on Time

  • Payment history is the biggest factor in your credit score. Late payments can significantly damage your score, so set up automatic payments or reminders to ensure you never miss a due date.

2. Reduce Your Credit Utilization Ratio

  • Try to keep your credit card balances below 30% of your total credit limit. If possible, aim for under 10% to maximize your score. Paying down debt and avoiding maxing out your credit cards can help.

3. Avoid Opening Too Many New Accounts at Once

  • Each time you apply for a new credit card or loan, a hard inquiry is placed on your report, which can temporarily lower your score. Be strategic about applying for new credit.

4. Check Your Credit Report for Errors

  • Mistakes on your credit report can hurt your score. Request a free credit report from AnnualCreditReport.com and dispute any inaccuracies, such as incorrect account balances or fraudulent accounts.

5. Keep Old Credit Accounts Open

  • The length of your credit history plays a role in your score. Even if you don’t use an old credit card often, keeping it open (with occasional small purchases) can help maintain a longer credit history.

Improving your credit score doesn’t happen overnight, but with consistent effort and smart financial habits, you can see meaningful progress. By paying your bills on time, keeping your credit utilization low, being mindful of new credit applications, checking your report for errors, and maintaining older accounts, you’ll build a stronger financial foundation. A good credit score opens doors to better loan rates, financial opportunities, and overall peace of mind. Start implementing these strategies today, and you’ll be on your way to a healthier financial future.

A good credit score is like a passport to financial freedom. – Unknown



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