Is your credit score above average?
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The latest survey by FICO (Fair Isaac Corporation) shows that, in general, American consumers’ credit scores are on the rise. In case you’re wondering how your credit score compares to others, the average in the United States is a 700 FICO score. Here is more info from the FICO survey and what you can do to increase your credit rating.
FICO Survey Results
Based on the latest score calculation, FICO 9, those aged 43 and up have the highest credit scores averaging at about 816. For those aged 29 and under, scores average closer to 770. Those with the highest scores have an average of 128 months of history.
The average age of credit is critical to a higher credit score, and those with the best scores have 305 months on their oldest lines of credit. That’s a whopping 25 years of credit history that can boost your score - but length of history and the average age isn’t everything.
Those with higher scores open new accounts less frequently and have an average of nine months between hard pull credit inquiries. Not surprisingly, those with higher scores also have a track record of on-time payments. Close to 95% of those with the highest scores have no delinquencies.
What Drives Your Credit Score?
FICO keeps the exact algorithm of its credit score calculations - they do share the factors that weight into the score. FICO scores range from 300 to 850. The largest chunk of the calculation derives from your payment history – it makes up 35% of the score.
Balances owed makes up 30%, and that’s the utilization factor. It’s not just how much you owe but the percentage of how much you owe compared to your available credit lines. Credit mix counts for 10%. That is the blend of revolving credit and installment loans.
Another 10% is new credit so periodically adding new accounts to your credit roster can boost your score, but isn’t the most critical factor. The final 15% of the calculation is the length of credit history. That means it’s wise to keep older accounts open and in good standing.
How Can You Improve Your Credit?
When you’re rebuilding credit after bankruptcy or striving to improve your credit, you must be very mindful of your habits and the choices you make. Paying your bills on time is the foundational behavior that will help keep you on track.
Avoid credit card overuse and carrying large balances. Keep your utilization low and don’t charge things that you can’t afford. Using credit to live a lifestyle above your income level is never a wise financial move. Use cards and pay off in full each month where possible.
Occasionally open new accounts, but only apply for things you’re certain you’ll be approved for – and that means doing your homework. Improving your credit is a process that takes time, diligence and patience, but can be quite rewarding.
Work on Your Credit ASAP After Bankruptcy
Credit Score Keys works with people that have filed bankruptcy and are looking to boost their credit scores now that their debt is under control. There is a persistent myth that filing bankruptcy wrecks your credit for a decade but that is not at all accurate.
Within a couple of months of receiving your bankruptcy discharge, you can start working on your credit. Step one is to check your credit report for errors. Step two is to research a secured credit card that will accept your bankruptcy past. Step three is to use the card wisely.
The next step is to work on getting an unsecured credit card and build from there. Re-establishing your credit score after bankruptcy is a slow process but one that should be started as soon as possible after your discharge to get you on the right track.
To find out more about improving your credit score after bankruptcy, contact Credit Score Keys today for a free consultation. Call 919-495-2365 today to discuss your credit and how we can help.
FICO score survey