Average Credit Score

Get the Facts About the Average Credit Score

The Basics of the Credit Score

When it comes to the average credit score, there are many different aspects that can impact this crucial number. Your credit score can have an impact on everything in your financial life from your ability to be approved for a credit card or even your ability to successfully purchase a car or a home through a lender. In the end, protecting your credit and your credit score is extremely important. The spectrum of the credit score runs from 350 to 800, with 350 being low of “bad” credit and 800 being exceedingly high or “good” credit. The average credit score for individuals in this country is around 725 to 726. However, there is a new type of credit score, the Vantage score, ranks individuals on a grade-like scale with an “A” being the highest and a “F” being the lowest. This new type of scoring may eventually replace the current credit score system, but it is exceedingly important that you understand both systems so that you know your financial standing regardless of the scoring system that you lender uses.

How to Calculate a Credit Score

The calculation of a credit score can be quite complex. Since there are many factors involved in finding out the specific number associated with a credit score, it is no surprise that the exact formula is kept secret. However, there are known aspects of the credit score include payment punctuality, number of credit sources currently opened, capacity for credit, amount of debt, and account balances. Certain aspects of financial life that can become detrimental to your credit score can include having too many accounts opened, having several accounts with outstanding balances, and late payments on open accounts. Even something as seemingly mundane as closing accounts can be a negative tick on your credit report. More importantly, any late payments on mortgages, credit cards, loans, and even your utility bills can work to lower the average credit score.

What is Your Credit Score?

Finding out about your credit score is simple and easy. There are countless companies in existence that will allow you to access your credit report and view your credit score. Experts say that you should review your credit report at least once a year. This way, you will be able to keep tabs on the progress of your credit. Also, reviewing your credit report on an annual basis will enable you to stay on top of the goings on in your financial life. It is not uncommon for individuals to review their credit reports and find that they have become victims of identity theft or some other type of fraud. For this reason, keeping effective records of your financial transactions are important should you need to contend a specific charge or access. However important it is to review your credit report, keep in mind that your credit score can actually become lower due to frequent accesses. For this reason, avoid accessing (or allowing for others to access) your credit information too frequently.