As almost anyone can tell you, your credit score determines much of what a person can and cannot do. For instance, without proof of your responsibility (essentially what a credit score is), receiving a car loan or mortgage is nearly impossible. Thankfully, the United States continues to move in the right direction! Just recently, the government revealed that the average credit score in the US hit an all-time high! Read on to find out why…
The Average Credit Score Soars
Not only does a FICO score help banks and lenders decide whether or not to loan to someone, but it also helps determine interest rates. Today, the average credit score for an American sits right at 700 – an all-time high! “At over 700, you will qualify for just about any credit at favorable terms,” the vice president for scores and analytics at FICO Ethan Dornhelm said. The average credit score sat a 695 for some time, before finally bumping up. Before that, when the housing crisis hit almost everyone in the U.S., the average number of credit score dove down to 685.
With the average score climbing and climbing, it seems that more Americans are taking budgeting seriously. Even better, about 35% of credit scores are not over 760! That’s simply fantastic! Of course, the recent economic upturn deserves much of the credit. “We’ve been in a relatively stable economic period,” said Dornhelm. Over the past few years, the market has finally stabilized and unemployment is going down. People are finally working and taking responsibility for their budget, meaning credit scores continue to increase!
Still Not Perfect
All this talk of raising scores and responsibility might make it seem like there’s nothing to worry about. However, that’s not exactly the case. Taking off the rose-colored glasses for a second, there are still some issues. Mainly, it seems that more young people need to take some responsibility for their budgets. Research says that the average credit score for people younger than 50 is 621 or less! Still, even issues have a silver lining. There’s still time for these young people to build up their average credit score before it hurts them too much.
Believe it or not, the worst hit are not actually the youngest, but rather people in the 30-50 age group. It seems that those who were not actively banking during the housing crisis are fairing better than those who were just starting then.
Bright Financial Future
Despite some age groups having significant troubles with their credit scores, the American people are getting a lot better at borrowing right or not borrowing at all and paying their bills on time. Dornhelm also mentioned that people are more interested in checking up on their FICO scores now. They also don’t mind working to make it higher. Meanwhile, older generations are learning about their own mistakes while younger ones are using the experience of their family who went through the Great Recession.
Credit scores were also changed thanks to renewed standards for public records. They are expected to jump even more due to these behind-the-scenes changes. All these changes help fuel a vision for a more financially stable United States!