What is the average credit score for Americans? This is one of the hottest topics of internet nowadays. The reason behind the popularity of this question is evident from the impact of credit on the daily life of every individual. Whether you are taking a further loan or even hiring a room on rent, your dealers ask about your credit score.
Moreover, you will encounter some employers who ask the credit scores of the applicants. This is done to ensure that the applicants are responsible enough. A general principle states that if a person cannot pay his outstanding credit then how can he be responsible towards his job. Did this thing put you in a dilemma? You should not worry even a bit. We have brought the answer to what is the average credit score for Americans.
The credit score:
You will likely be familiar with this terminology. If not, then we are here to explain. A company named FICO is responsible for calculating and assigning credit scores to people around America. This score builds your reputation in the debtor-creditor community.
The person, company or bank which lends you money, assures that your credit score is as high as possible. An individual with low credit score will face two things: either the creditor will reject his credit application or the lender will charge a higher percentage of interest as an initial insurance.
The scores generated by FICO lie between 300 & 850. The best possible score that one can achieve is 850.
The credit scores categories:
Bad: anything below 600.
Now that we know the different categories. Let us reveal the average credit score which is the last thing that a dealer sees in you. The average credit score in America is 695. A little less than the good category.
Now you would ask what actually is an average credit score and what does it bring with itself?
Usually, a score of 580 is enough to earn you an FHA housing loan with an advantage of 3.5% down payment. On the other hand, getting a car on credit actually requires a mid or early 600s. But at the end, it will all depend on your score. The lower your score is, the higher interest you will have to pay.
How to up your score?
Paying bills on time:
It is a no-brainer situation. You have to pay your debts on time to score high. According to researchers, payment of debt makes 35% of your credit score. So delaying the payments may not end well.
Paying down the debts:
Every person has some sort of debt creeping on him. If you have a bad credit score then you can better it by paying down your debt on a high-interest balance prevailing. This can help you increase your credit score.
In short, clearing your debts early is a key to high credit score.
Checking the credit report:
According to researches made by FTC, 25% of Americans do not check their credit reports regularly. There is a risk that your report might be misstated and you might suffer a drastic change in your credit score. Remember, it is your duty to check that everything is okay.