What Is The Average Credit Score?

Friday, August 26, 2011, 13:18
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Importance of the Credit Score

You probably know how important your credit score is, especially if it is not particularly high. Lenders look at an applicant’s credit score when determining interest rates and whether to lend someone money at all. A poor credit score can make it difficult to be approved for a car loan or mortgage, or if approved, it will mean that your monthly payments are higher. Your score is based on your available and actual credit, the length of your credit history and your record of paying bills on time.

The average credit score in the United States is around 700, with 750 generally being considered as being a good score. The credit score range is from 300 to 850, with 300 being the lowest possible score,and the highest possible being 850. If your credit score is below 600, you probably have financial issues that need to be addressed and you may find it difficult to get competitive rates on a loan. All the three major credit reporting agencies use this system, sometimes also known as the FICO credit score, after the Fair Isaac company that developed the system of scoring.

The first thing to do if you are applying for a loan or mortgage is to determine what your credit score is, and many people still do not realize that they are legally entitled to a free copy of their credit report. Any errors on your credit report should be fixed immediately, as even the smallest mistake can lower your score and an estimated 80 percent of credit reports contain at least a small error. Just a few points difference in your credit score can potentially mean a difference of hundreds of dollars a year in mortgage repayments and if at all possible, you should try to improve your score before applying for a car loan, mortgage or credit card.