Theaverage credit score in America is 677. However, the median credit score is662. This means that half of the people in America have a credit score lowerthan 662 while the other half has a credit score higher than this number.
Theway your credit score is calculated depends on where you live. Credit scores arecalculated based on your FICO scoring model which looks at six differentfactors that affect how likely you are to pay back loans and other forms of debt. They can be affected by things like your age, income, number of accounts opened, how long you’ve had them open for and what kind of new account or balance transfer offer was made to you recently.
TheUnited States Federal Reserve sets a national average for the credit score tobe used as a benchmark for lending decisions. However, the average varies fromstate to state.
Thecredit score is a measure of an individual’s risk of being financiallyirresponsible. People with a high credit score are considered to be more trustworthy and less likely to default on their debts.
FICOcredit scores break down in the following manner:
•800 to 850: Exceptional
•740 to 799: Very good
•670 to 739: Good
•580 to 669: Fair
•300 to 579: Very poor
Theaverage credit score has generally improved since 2005, but slight dips wereseen around the Great Recession that ended in 2009. A large number of people declaring bankruptcy or defaulting on their loans would have caused their scores to plummet which then lowered the overall average for all individuals with this particular trait according to Experian’s research from last year.
Ina bid to get out from under their parents’ shadow, Millennials are taking on moredebt than ever before. This generation has an average credit score of 680 which is considerably low when compared with baby boomers who have 736 – proving that young adults need better financial knowledge if they want success in this world!
Debt to income ratio maynot directly affect your credit score but it does have an indirect effect. Onefactor lenders consider when modeling an individual’s risk for debt is their monthly utilization rate of available funds; the percentage that you’re using each month and how much total has been authorized in comparison with what one might need at any given time (this number will vary based on current balances).
