The average credit score in America is 677. However, the median credit score is 662. This means that half of the people in America have a credit score lower than 662 while the other half has a credit score higher than this number.
The way your credit score is calculated depends on where you live. Credit scores are calculated based on your FICO scoring model which looks at six different factors 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.
The United States Federal Reserve sets a national average for the credit score to be used as a benchmark for lending decisions. However, the average varies from state to state.
The credit score is a measure of an individual’s risk of being financially irresponsible. People with a high credit score are considered to be more trustworthy and less likely to default on their debts.
FICO credit 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
The average credit score has generally improved since 2005, but slight dips were seen 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.
In a bid to get out from under their parents’ shadow, Millennials are taking on more debt 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 may not directly affect your credit score but it does have an indirect effect. One factor 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).
Read More: https://www.creditrepairease.com/blog/the-reports-2021-average-credit-score-in-america/
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