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Chances are if you've ever filled out an application for a college loan, apartment, auto loan or mortgage, you've been at least somewhat concerned with your FICO score. Any time you ask a lender to provide you with money, you can be sure they're going to look at your credit report to assess their risk in that relationship.
And the odds are good that if you are among the roughly 60% who actually do know their credit score, you might also be curious where you rank among the masses.
We have sifted through a lot of information and compiled some average credit score statistics.
The FICO scoring system has been around since 1989 and was designed to assess the creditworthiness of consumers. 17 years later in 2006, the VantageScore system was created as an alternative by the three national credit reporting companies – Equifax, Experian and TransUnion. Both FICO and VantageScore work on the same scale ranging from 300-850, though they do place different weights on the factors that contribute to their respective scores.
Plenty of elements come into play when determining your average VantageScore or FICO score. It looks at things like your payment history, your recent activity, how long your credit history is, and what credit mix you have.
FICO scores range from 300 to 850, with the higher scores indicating a smaller credit risk.
Any score of 670 or higher is considered to be good, though 800 or greater would be exceptional. 67% of Americans have at least a “good” credit score.
The percentage of the population that has a FICO score over 800 is 21.8%, up a full percent from the year before.
The highest credit score possible is 850 and only 1.2% of the American population has the privilege of being included in this statistic.
As of mid-2019, the average credit score in America is 703.
Credit scores are on the rise. The average American score is at an all time high, with a trend suggesting that next year will present an even higher average FICO score. This is a breath of fresh air and an encouraging sight amongst all the credit card debt that looms large in our country.
The Asian population has the highest average FICO score at 745. Conversely, the Black population has the lowest average score at 677.
Typically, with an increase in age, people are more secure in their finances. That’s not to say that they necessarily have more money. They are, however, often more stable in their living condition and already set with many of their bigger purchases in life, like cars, higher education and a house. Credit scores build up as they don’t have as many big purchases to put on credit and risk missing a payment.
Similar to age, credit score increases with each generation. Typically, older generations are more secure in their finances than younger generations. This is due to the same reasons listed above, like the majority of big purchases taking place in a person’s younger years and simply having a longer credit history accumulated over the years.
Throughout the United States there’s really no noticeable trend to the average FICO score. The states where cost of living is higher and creditworthiness might be expected to be lower, like New York and California, actually have good credit scores and are about middle of the pack compared to the rest of the states. Some lower populous states, like South Dakota, Vermont and New Hampshire, have great credit scores which might be attributed to the smaller population, but that might be the only trend that sticks out at all.
Income bracket is closely connected to credit score, as is probably expected. It’s easy to explain why, as people make more money, they have better credit worthiness. Individuals with a higher income level have less of a reason to max out a credit card or spend more on that card than they can actually afford to pay back. Not paying credit card bills in a timely fashion is the quickest way to lower your score, so it’s not surprising to see that the upper class has a significantly higher average credit score than the lower class.
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Credit score is important because it reflects both your responsibility and your ability to pay off your credit bills. Any sort of business giving you a loan, either in a monetary form or in a form of a series of payments, will look at your credit score to determine how likely you are to pay back the loan, and to do so in a timely manner.
Credit scores act as a mirror into your financial activity that lenders and even employers can look at to see how reliable they feel that you are with money.
High credit scores come with many advantages. Lower interest rates allow you to pay less for a big purchase than others with a higher interest rate.
High scores often result in lower interest rates because the seller or the bank sees your positive reputation and sees you as less of a risk to not pay back the money.
Similarly, you’re more likely to get approved to buy a house, rent an apartment or take out a loan with a high credit score. When you’re not seen as a risk and they feel like they can trust you to pay for the house or pay back the loan, they are far more likely to allow you to take out a loan or buy the house.
Bad or lower credit scores can increase your interest rates and hurt your chances of getting approved for certain housing or loans.
You’ll most likely be seen as less reliable than those with positive credit scores because of your history with making payments back in a timely manner, if at all.
Getting a loan can be especially tough. Low credit scores reflect your past ability to pay back credit payments. If they see a low credit score tied to you, they might think that you don’t have the ability to pay back the loan that they will give you.
If your credit score isn’t great, there are still other things that banks and lenders take into consideration. They might look at your level of income and make a determination of your reliability in that way.
Maybe they’ll combine that with your age and see that you haven’t had a ton of time yet to grow your credit score. Whatever your credit score may be, there are other factors that are considered other than credit score.
Lenders and banks will also commonly look at your debt to income ratio. This will compare the amount of revenue that you make with your monthly debt payments.
This is a great way to see if a customer will have the money in the immediate future to pay back whatever the loan might be. So just because your credit score might be lower, don’t let that get you down.
Sure, you should try to improve your credit score as soon as you can. But, if you’re applying for housing and are worried about your credit score getting in the way, remember that other factors are taken into consideration aside from just your credit score.
Credit scores provide a window into your financial affairs. While it isn’t a perfect method and can overlook some components, it generally provides an accurate enough look into your relationship with your credit cards and with your credit card payments.
Do you pay your credit card bills on time? Are you overspending on your credit card? Have you been forced to file for bankruptcy before? These are all possible factors in determining your credit score.
If you don’t have a great credit score, don’t worry just yet. The majority of employers and lenders look at other factors besides simply your FISCO or Vantage score in determining your approval for either a job or a loan.
You may never have that max credit score of 850, but there are many ways that you can successfully raise your credit score to a good, healthy number. Additionally, there are other ways that your financial responsibility is judged besides just credit score. So if your credit score is low, work to raise it, but know that you can still be approved for that loan or that apartment while working on it.