Average Credit Scores
How do you stack up?
Now more than ever, U.S. consumers are acquiring more credit and checking credit online. Because of the increasing number of auto loans, mortgages, and credit card balances, the U.S. would seem to have a low national average credit score. But, it's actually in the neighborhood of 680, which isn't exactly poor. Credit experts feel that having debt isn't necessarily bad - it's all in how your credit is managed, as to how your credit score will be affected. So while consumers have more debt than the year prior, and a quarter of the country has more debt than the national average - apparently we manage debt fairly well, as our average credit score is hanging in there.
Have you taken a recent interest in your credit score? What was it that made you open your eyes? An overdue bill? A collection agent? A possible new purchase or lease? No matter the reason, you should always know your credit score. But if you don't know what your credit score means, it's not very helpful. Before you get your credit report and credit score online - it might be valuable to see the average credit scores of other states.
Credit Reports
What is a credit report?
A consumer credit report is a factual record of your credit activities. It reports all your credit accounts and outstanding loans, the balances on your credit cards and loans, and your bill paying history. Lenders are permitted by credit report laws to check your credit report and review it in order to determine whether or not to grant you credit. In order to start to build a credit report, all you have to do is establish credit in the form of a credit card account, car loan, mortgage, or student loan. Most of the information on your credit report comes directly from the business you have accounts or outstanding loans with. When you pay your bills or fail to pay your bills, lenders usually report your credit information - good or bad - to credit report agencies.
What is in a credit report?
There are four main categories of information in your credit report:
1. Personal information: Your credit report contains information that identifies you, including the following:
Your name
Your social security number
Your current address and previous addresses
Your phone number
Your date of birth
Your current employer and previous employers
2. Your credit history: Your credit report includes your history of bill paying with lenders such as:
Banks
Mortgage companies
Retail stores
Finance companies
3. Inquiries: Your credit report lists the lenders and credit grantors that have requested or received your credit report. The general rule is the fewer inquiries on your credit report, the better.
4. Public records: Your credit report lists any items that may affect your credit, including:
Court judgments, including child support judgments
Tax liens
Bankruptcies
Your credit report is available for public viewing by a few different types of organizations, including lenders who are considering granting you credit and government agencies who are reviewing your financial status for government benefits. In addition, potential employers may do a credit check for employment to determine whether you're financially responsible. And landlords often do a credit check for renters.
This is why it's so important for you to be aware of what your credit report says about you and your financial history. If you find errors on your credit report, you should verify those errors and then take the necessary steps to improving your credit report and credit score.
How do I get my credit score?
There are a number of ways you can obtain a copy of your personal credit report. One option is for you to go directly to one of the three main credit report agencies - Equifax credit bureau, Experian credit bureau, or TransUnion credit bureau. But keep in mind that since these credit report agencies often obtain different information, getting a single bureau credit report from one of these credit bureau companies will only provide you with a piece of your credit report information - and these credit reports will cost you money.
To get a more complete picture of your personal credit history, your best bet is to go to an online credit report agency such as CreditReport.com.
CreditReport.com allows you to obtain a copy of your personal credit report score quickly and easily.
The Benefits of CreditReport.com
Online delivery: With CreditReport.com, you can access your online credit report in seconds. And you will also receive special promotions if you choose to become a CreditReport.com member.
Your credit score: The most crucial part of your credit report, your credit score is the bottom line number most lenders look at when determining the interest rates they will charge you. With CreditReport.com, you can receive your credit score from a single federal credit bureau or all three with a 3-in-1 credit report.
Credit monitoring: To help protect you against identity theft, CreditReport.com's credit monitoring service alerts you within 24 hours of any significant changes to your credit file. To learn more, please contact a CreditReport.com specialist at 1-800-720-4420 or go to www.CreditReport.com.
Free online credit report: Federal law entitles you to a free copy of your credit report if you've been turned down for credit, rental housing, or employment in the last 60 days due to information in your credit report. If you are denied credit, the company that turned you down is obligated to provide written notice within 30 days of the credit check agency they used to make their decision, so you can contact that credit report agency, obtain your credit file, and review it.
What affects my credit score?
A credit score is very much like a score you would get on a test - you get points for everything positive and points taken away for everything negative.
Your credit score can range from 300 to 900 points, and like a test score, the higher your credit rating, the better. There are a number of factors that can affect your credit score positively or negatively.
Things that affect your credit score positively:
Paying your bills on time and in full.
Using 25 percent or less of your available credit. Ideally, you should carry a balance of no more than $2,500 if your credit limit is $10,000.
Steady employment. People who are steadily employed are viewed as being better able to pay their bills on time.
Things that affect your credit score negatively:
Late or missed payments
Using more than 80 percent of your total amount of available credit
Bankruptcy
Liens or foreclosures
Periods of unemployment
Too many requests for new lines of credit
Main Factors That Affect Your Credit Score
Your payment history. The most important factor to a potential lender is whether or not you will pay your bills in full and on time. The more recent your good (or bad) payment history, the more important it will be for your credit score.
Your outstanding debt. The more credit cards you have that are maxed out, the lower your score will be. As mentioned above, try to keep your credit card balances at 25 percent or less of your limits.
The length of time you've been building credit. The longer your credit history, the higher your credit rating.
The number of inquiries on your credit report. The more times you've applied for credit cards or loans, the more credit report inquiries will show up on your credit report. A higher number of credit report inquiries may indicate that you're struggling financially or may have a lot of debt (even if you never used the cards or gotten the loans).
