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Consumers are becoming increasingly interested in their credit score. They have learned that their credit score can either help or hurt them when they need to obtain a loan or a new credit card. Credit scores typically fall within a range of 300 to 850, with the higher numbers representing better credit scores. People today are better informed regarding what their own credit score is, but they are often curious how their score compares to those of other consumers in the United States.
Currently, the national average credit score is 692. This is actually a fairly strong number, as credit scores of 650 and above are considered good scores. Of course, as with any average, it is important to realize that many scores above and below the average figure are used to arrive at the final average number. Although 692 is not a terrible credit score, there are many scores used to arrive at this average that are closer to 800 and many that are also closer to 300.
Most sources speculate that only 13% of the population possesses a credit score of 800 or above. The national average credit score also takes into account the 15% of the population who have a credit score of 550 or below. The rest of the population falls somewhere between credit scores of 550 and 800. The national average credit score is 692 because of the very low credit scores which drag the overall average down.
Several factors are utilized to determine the individual credit scores that make up the national average credit score, but two figures more prominently than the rest. Approximately 35% of the weight of any credit score is attributed to a consumer’s payment history. This essentially means whether the consumer pays their bills on time and in the correct amount. Another 30% of the weight comes from outstanding debt. Consumers with a higher rate of debt will typically have a lower credit score.
Consumers can raise their credit score by reducing their overall debt and always making their payments on time. A credit score is in many ways based on habits that are developed over years, so it can take time to see significant improvement in credit scores. However, the effort to improve credit scores is worthwhile as this will likely result in the consumer’s increased ability to obtain loans, financing, and credit cards for the things they need.