The Average American Credit Score And What It Means To You
Below is a MRR and PLR article in category Master Series -> subcategory Personal Finance.
Understanding the Average American Credit Score and Its Impact on You
Your credit score is more than just a number lenders check when you apply for a loan. It can also be assessed when you're getting insurance, renting an apartment, or even applying for a job. But what exactly determines your credit score, and how does the average American's score compare?
What is a Credit Score?
Credit scores range from 300 to 850. While 300 is the lowest possible score, 850 represents a perfect score. Most people fall somewhere in between. You might think the midpoint is 575, but the average American credit score is closer to 690. However, economic shifts could potentially lower this average over time.
Why Your Score Matters
A score of 690 may seem decent, but it often falls short when aiming for the best deals from most lenders. Lenders often use your credit score to decide whether to approve your loan, require collateral, determine the loan term, and set your interest rate. A lower score could mean higher costs in the long term.
The Ideal Score
While each lender has its criteria, studies suggest a credit score of 720 or higher generally secures the best terms. Thus, an "average" score of 690 might not be enough to access the most favorable rates. If your score is 620 or lower, finding a lender willing to offer you a loan can be challenging, and you'll likely face higher interest rates.
The Future of Lending
Some experts believe lenders may eventually grant more loans to individuals with lower scores to maintain profitability. As lending is their main source of income, accommodating more borrowers?"even those with lower scores?"could become necessary.
Improving Your Score
If you're planning to apply for a job, loan, car, or insurance, it's wise to improve your credit score. Consider the average score as a benchmark; aim for higher to secure the best rates.
By understanding your credit score and how it compares to the average, you can take steps to improve your financial standing and secure better opportunities.
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