Understanding the Average Credit Score: A Complete Guide
Do you ever wonder what the average credit score is and how your score compares?
It’s tough to figure out what a “good” credit score really is, especially when the rules seem to change based on who you ask. But knowing where you stand relative to the average score can be incredibly useful in helping you set goals for improving your credit.
That’s why it’s important to understand the average credit score in the U.S. What factors affect your score, and how you can take steps to improve it.
Read on to find out what the average credit score is, why it matters, and how you can work toward boosting yours.
TABLE OF CONTENTS
What Is a Good Average Credit Score?
What Is the Average Credit Score?
Credit Score Ranges Explained
Why Does Your Credit Score Matter?
Average Credit Score by Age
How to Improve Your Credit Score
What is the Lowest Credit Score
Conclusion
Ready? Let’s start.
What Is a Good Average Credit Score?
When talking about credit scores, it’s important to know what counts as a good average credit score. According to FICO, a good score falls between 670 and 739. Anything below 670 is considered “fair” or “poor,” while anything above 740 is deemed “very good” or “exceptional.”
A higher credit score means lower interest rates and better loan terms, making it easier to qualify for credit cards, mortgages, and other financial products.
So, if you're aiming for financial stability, hitting that "good" credit score is a solid first step.
What Is the Average Credit Score in the U.S.?
As of 2023, the average credit score in the U.S. is 716, based on the FICO® scoring model. This score falls in the “good” range, meaning most Americans manage their credit responsibly but still have room for improvement.
While 716 is the national average, scores can vary significantly depending on factors like age, income, and geographic location. This score is a good benchmark to measure where you stand compared to others.
How Rare Is a 700 Credit Score?
A 700 credit score is often viewed as a solid score—it's considered “good” and allows you to qualify for most loans and credit products with relatively low interest rates. Roughly 58% of Americans have a credit score of 700 or higher, so while it’s not rare, it still represents a benchmark of financial health that many strive to achieve.
How Many People Have an 800 Credit Score?
Only about 21% of Americans have a credit score of 800 or higher, placing them in the “exceptional” category.
So, how many people have an 800 credit score? While it’s not common, reaching this score is achievable with disciplined credit management. Having an 800+ score opens doors to the best interest rates, credit cards with premium rewards, and other exclusive financial benefits.
Is a 900 Credit Score Possible?
A perfect 850 credit score is the highest you can achieve in the FICO model, so is a 900 credit score possible? The answer is no. FICO caps its scoring model at 850, so a 900 score isn't achievable. However, if you maintain a score of 800 or higher, you're already in an excellent range and will likely qualify for the best interest rates and financial products available.
Credit Score Ranges Explained
Credit scores fall within a specific range, typically between 300 and 850.
See how the credit score range chart breaks down:
The higher your score, the better the financial products you can access. A credit score of 770 or above is ideal but not necessary for most people to qualify for good financial terms.
Why Does Your Credit Score Matter?
Your credit score affects nearly every financial aspect of your life. Lenders use it to determine whether they’ll approve you for a mortgage, car loan, or credit card. A high credit score shows that you’ve managed your debts responsibly, while a lower score might indicate past financial difficulties.
Here's why your credit score matters:
Loan Approvals: Lenders often have a minimum credit score requirement. If your score is below average, it may be harder to get approved.
Interest Rates: The better your score, the lower the interest rates you’re offered. That means less money paid in interest over the life of a loan.
Credit Card Offers: A higher score can open up access to credit cards with better rewards, higher limits, and lower fees.
Even a small drop of 100 points in your credit score can significantly affect your finances. It could mean hundreds or even thousands of dollars more in interest over the life of a loan. That’s why maintaining a strong credit score is crucial for saving money and securing better financial opportunities.
Average Credit Score by Age
Credit scores typically improve with age, as older individuals have longer credit histories and more time to build responsible habits. Here’s how the average credit score by age looks like:
Young adults, especially those around the average credit score by age 25, may have lower scores due to shorter credit histories. But as people age and establish more responsible financial habits, their scores tend to improve. By age 45, many individuals have scores that reach the "good" or "very good" categories.
How to Improve Your Credit Score
Now that you know how your score compares, let’s talk about how to improve your credit score. Whether your goal is to hit the national average or to exceed it, these steps will help you build a stronger financial foundation:
Pay Bills On Time
Payment history makes up 35% of your FICO score, so timely payments are crucial. Set up automatic payments or reminders to avoid missing due dates.Reduce Credit Utilization
Aim to use less than 30% of your available credit. For example, if you have a credit limit of $10,000, try not to carry a balance higher than $3,000.Avoid Opening New Accounts Frequently
Each time you apply for a new credit card or loan, it triggers a “hard inquiry” on your credit report, which can temporarily lower your score. Open new accounts only when necessary.Check Your Credit Report for Errors
Mistakes on your credit report can hurt your score. Request a free credit report annually and dispute any errors you find with the credit bureaus.Pay Down Debt
If you're carrying high balances, focus on paying them off. This improves your credit utilization ratio and shows lenders that you can manage debt responsibly.Keep Old Accounts Open
Closing old accounts reduces the length of your credit history, which can lower your score. If possible, keep accounts open, even if you don’t use them frequently.
Improving your credit score isn’t an overnight process, but with consistent effort, you can see noticeable changes within a few months.
What is the Lowest Credit Score?
The lowest credit score you can have is 300. This kind of score usually comes from serious credit problems, such as not paying back loans, going through bankruptcy, or having little to no credit history at all. If your score is this low, it’s important to focus on improving it as soon as possible.
But what if you need a loan and have the lowest credit score? Is there any chance of getting approved?
Is It Impossible to Get a Loan with a 300 Credit Score?
While having a 300 credit score makes it very hard to get a loan, it's not completely impossible. You can try a credit builder loan. However, if you are not fun of the idea of borrowing from your own money, there’s still a way. There are some lenders that specialize in offering loans to people with bad or no credit, but these loans usually come with very high interest rates and strict terms. These loans may be called "bad credit loans" or "no credit check loans", but they are risky because they can cost you much more money in the long run.
Some places that might offer loans to people with very low credit scores include:
Payday Lenders: These lenders offer small, short-term loans but often have very high fees.
Title Loans: These use your car as collateral, but if you don’t pay back the loan, you could lose your car.
Online Lenders: Some online lenders are willing to give loans to people with bad credit, but the interest rates will be higher.
If you can avoid taking out a loan with a low score, it’s usually better to focus on improving your credit first. That way, you can qualify for better loans with lower interest rates in the future.
Conclusion
Your average credit score plays a key role in your financial life. Whether you're above or below the national average of 716, there’s always room for improvement. By understanding your credit score, tracking how it compares to others by age or location, and making responsible financial decisions, you can steadily improve your score.
Whether you're aiming to hit 700, 800, or simply improve from where you are now, the steps outlined above will guide you toward better credit. As you improve your score, you'll unlock more financial opportunities—lower interest rates, better loan terms, and premium credit card offers.
Keep in mind that building credit needs patience. With time, consistency, and a good strategy, you'll find yourself moving up the credit score ladder. You’ll be well on your way to achieving financial success. Let Disputely AI help you.
Disputely AI makes it easy to identify errors that could be dragging down your score, giving you a faster path to better credit. Start your journey toward financial freedom today with Disputely AI—the smart way to clean up your credit report and boost your score.
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