How Does Your Credit Score Stack Up?

Have you heard the increasingly optimistic news about credit? The average credit score is the highest it’s been in eight years: 682. That’s according to Experian’s annual State of Credit report, which looks at the broad picture of what’s happening with our credit. And it’s a VantageScore increase of seven points over just two years ago.

But alongside those higher scores, we also have more debt, which is a bit confusing. The average credit card balance in 2017 was $6,354, but it’s crept up to $6,629 this year. Average mortgage and non mortgage debt have also increased, with mortgage debt—now $213,599 on average—having increased more than $11,500 over two years prior.

You would think that more debt would mean worse scores, right? But while we have more debt, we’re keeping it under control, for the most part. The average revolving credit utilization is holding steady at 30%, and only 6.8% of accounts are 90 or more days past due.

Maybe you feel more aware of where your credit stands than five or 10 years ago. It’s true, it’s gotten easier to monitor your credit and see your credit score through free online tools. And that awareness can put the pressure on you.

Having just one account that’s late for 30 days or more can start to bring your number down. And as your credit utilization (the amount of your credit limit you have used) rises, your score starts to go down down. Experts say to keep your utilization at 30% or below, but the lower you can go, the better.

Payment history and credit utilization together make up 65% of your score, so by keeping a close watch on these two elements, you’re doing most of the work required to build your score.

And keep in mind that while 682 is the average VantageScore noted by Experian, it’s not exactly an A+ score. A VantageScore of 650-699 is just considered “fair,” while 700-749 bumps you to “good” and 750-plus gets you to “excellent.”

Meanwhile, the average FICO score is 706, which is “good.” Both averages are in the “prime” range, meaning you’ll get competitive interest rates and credit terms. But it’s not until you get up into the 750-plus range that you really get the best offers.

If you’re repairing your credit history or just starting out, it may take time for your good habits to reflect in your score. If you’re in the high 600s, there’s still work to be done, but be confident you’re making good progress.

from Lifehacker https://ift.tt/39iTRrs

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