Calculate Your Average American Credit Score and Find Out If You're Above or Below It
Calculate Your Average American Credit Score and Find Out If You're Above or Below It
You never know what opportunities may come your way or what obstacles you may face based on your credit score. In addition to being the primary element in loan approval, your credit score also significantly affects the total amount of interest you'll have to pay back. Plus, lenders and even prospective employers can react differently to even little changes to your credit score, for better or worse. The average American credit score is 692 out of 800, which falls just short of "good credit" but still enables you to secure a loan with a reasonable interest rate (according to Experian, one of the three main credit bureaus).
Nevertheless, 720 is the credit level that follows. You will most certainly be eligible for loans, and you will likely be offered the greatest interest rates, after you achieve this level, which is in the "excellent" category. That is why keeping track of your credit and understanding how the scores function is crucial. By keeping track of your present situation and planning for your future, you can reduce the amount of interest you pay on your debts by thousands of dollars.
A credit score of 620 or above is typically considered to be the minimum requirement for obtaining a loan. Therefore, if your credit score is around the national average, you have two options: either settle for paying slightly higher interest rates or take steps to improve your credit so that you can qualify for cheaper rates.
Your credit score can be improved in numerous ways.
Paying your bills on time is the first and most basic step in improving your credit. The punctuality with which you pay your bills constitutes one-third of your entire credit score.
Attempting to maintain minimal balances on your accounts is another sound strategy. This factor accounts for thirty percent of your credit score. Ideally, you should not use more than half of your available credit.
Next, if you have a longer history of on-time payments, your credit rating will improve over time. Your credit history will remain the same for as long as you live, but you may give your children a leg up by encouraging them to start building credit at a young age.
Assuming they are all handled properly, having multiple sources of credit is typically a good thing. You are only given a 10% score based on your credit fluctuation.
Getting a bunch of credit cards at once is a bad idea. Your credit score will reflect this. Avoid signing up for a bunch of credit cards on a whim and only apply for the cards you absolutely need. Is your credit score higher than the national average or lower than normal? There are plenty of options for you to improve and sustain a good credit score.
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