Although the U.S. economy has suffered due to the COVID-19 pandemic, many consumers have been able to improve a major component of their financial lives over the past several months.
Average Credit Score in America
Experian’s 2020 Consumer Credit Review says the average FICO Score in the U.S. set a record score of 710, according to data taken from the third quarter of the year. The report says the high score represents a 1% increase (that’s seven points), and it’s the largest boost in 10 years.
Clark’s Magic Credit Score Number
So exactly what is a “good” credit score?
“There are certain breakpoints where things get easier for you,” Clark says. “One that’s really important is being around a 680. That’s a point at which people look at you differently than when you’re below that.”
“If you can get up to around a 760, you’re going to get the same benefits, the same offers, that someone who has an 840 score is going to get,” she adds.
How to Increase Your Credit Score
If your credit score is nowhere near those cited above, don’t worry. There are several ways to raise it.
Clark says the two biggest ways to increase your credit score are to:
- Make all of your payments on time.
- Keep the percentage of the available credit you use very low. Keep your credit utilization ratio low. That’s the percentage of how much of your available credit you’re using.
When it comes to credit utilization, “30% of your available credit is where you want to be,” Clark says in his podcast. “So, in the example of $10,000 in credit, [you want to have] no more than $3,000 in use. If you go above 50% your credit goes diving off a cliff.”