Average Credit Score in America

Your credit score could be the key to many doors of opportunity in your life or it could be the curse that holds you back.  Not only is your credit score the deciding factor in whether or not you get a loan, it plays an important role in the amount of interest you will pay your creditors. And, for better or worse, even small changes in your credit score can make a significant impact in how you are treated by lenders or even by potential employers. The average American credit score is 692 out of 800 (according to Experian, one of the 3 major credit bureaus) which is considered on the lower side of "good credit" but can still get you a loan with a relatively good interest rate.

However, the next highest credit level is 720. Once you reach this level, you are in the "excellent" range and can definitely qualify for loans and very often at the best interest rates available. That's why it's extremely important that you stay on top of your credit and maintain a grasp of how the scores work. Knowing your current status and setting goals for your future status can help you to save thousands of dollars in interest that you pay on your various loans.

It is generally accepted that a credit score of over 620 will get you a loan. So if you are one of the people with the average American credit score, you can either be content with that and accept the fact that you are paying a little more on your interest rates, or you can start working on your credit to get it up to the level that will qualify you for lower rates.

There are many ways that you can improve your credit score.

First of all, the easiest way to establish better credit is to pay all your bills on time. How timely you are in your bill payments accounts for 35 percent of your total credit score.

Another good practice is to try to keep low balances on your accounts. This aspect represents 30% of your credit score. A good balance to shoot for is to have 50% or less of your total lines of credit used up.

Next, the longer your credit history, the better your rating will be if you have paid your bills on time. There is not much you can do to change the length of your credit history but you can make sure that your kids start out building good credit early so that they will have an advantage.

Having many sources of credit is usually a positive factor, as long as they are all managed well. Your credit variability accounts for 10% of your score.

Avoid signing up for many credit cards at once. This counts against you in your credit score. Limit your credit applications to what is really necessary and don't just sign up for lots of credit on a whim. Are you above or below the average American credit score? Either way, you have many opportunities to bring up and maintain a healthy credit rating.