Your credit score is an important part of your financial health, and affects everything from interest rate to the ability to get a loan. Comparison is a natural way to gauge how well we’re doing (or not doing) at something. As such, you may be curious what the average credit score is. Where do you stack up? Is your credit score good or bad? These are common questions in the world of finance. So let’s break it down.
The FICO credit score average in the U.S. is 711.
Fair Isaac Corp.’s FICO Score is one of the most widely used scoring models in America. FICO scores range between 300 and 850. A score of 711 is considered good according to this scoring model.
Think of your credit score as your financial snapshot. A high credit score means you are a financially responsible person and your finances are in good standing. This makes it easier for you to get approved for any line of credit including loans, mortgages, and credit cards. The higher your credit score the more easily you will get approved and the lower the interest rate you’ll pay on your loan. You’ll find that an excellent credit score range of 800-850 will open doors for you.
Credit scores are calculated using the information contained in your credit report. FICO calculates your credit score using 5 types of information from your report:
If your credit score is above 670, that’s good. That doesn’t mean you can afford to be reckless with your finances however. It takes a long time to build good credit but just one delayed payment or default to damage it.
If your credit score is below 669, you have to take steps to improve it. Making all loan and credit card payments on time every month is the single best thing you can do to improve your score. Other things you can do include looking for ways to lower your debt-to-income ratio and keeping old credit cards open. Not applying for new credit cards or loans will also help.
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