Credit scores hit record high, giving more Americans access to cheaper loans and lower interest rates


Great news for U.S. consumers. There’s a new trend afoot that means you can expect access to better interest rates when you need to borrow and lower premiums from your insurer.

It’s all because of the way you’re handling your credit — and the impact that has on those three little numbers that rule your financial life.

We’re talking about your credit score!

Read more: 13 smart moves to set yourself up for financial success

Americans are doing a great job handling credit

We as a nation of consumers are doing an unprecedented job handling our credit, according to the latest numbers from FICO score originator Fair Isaac Corp.

The Wall Street Journal reports the average credit score in America hit 700 in April. That’s the highest level it’s been at since record-keeping began in 2005.

Meanwhile, the number of Americans with scores below 600 dropped to 40 million, which accounts for about 20% of U.S. adults with FICO scores. Back in 2010, that percentage was as high as 25.5%.

Your basic FICO credit score is a number on a scale from 300 to 850 that reflects how well you handle your financial obligations. The higher the score, the safer of a credit risk you’re likely to be to lenders.

Lenders use the FICO score to set your interest rate when you need to borrow money and insurance companies also use it as a cue to put you into a higher or lower premium rate. Some employers will check your credit when you’re applying for a job. They may not extend a job offer if they don’t like what they find out about your financial habits.

With a score of 700, most Americans are now firmly in the good category. Here’s how FICO breaks out the credit score scale:

  • 800 + is considered exceptional
  • 740 to 799 is a very good score
  • 670 to 739 is considered a good score
  • 580 to 669 is a fair credit score
  • 579 and lower is a poor credit score

For more detailed info on the nuances of credit scoring, see this blog post from myFICO.

If your credit score isn’t reflecting the overall nation trend of record highs, here’s what you need to do right now…

First, know what makes up your credit score

Here’s a breakdown, courtesy of

new fico scoring rules tax liens civil judgments

Second, get a plan in place to improve your credit score

If you’re suffering from poor credit, there are several surefire ways to get your credit healthy again. Follow these tips and you’ll be well on your way:

1. Always pay your bills on time and pay down the total amount you owe. Because this accounts for the largest chunk of your score (35%), this is the single most important thing you can do!

2. Keep a low credit utilization rate. If you’re mired in debt, it’s likely to take some time to lower the amount of credit you use in your life. But over time, you should aim to use 30% or less of your available credit at any once. If you want a really great credit score, keep your credit utilization rate to 10% or less.

3. When you pay off a credit card, don’t close the account. You’ll reduce the amount of available credit in your life if you shut down a credit line. The better approach is to use credit responsibly once you’re out debt. That means making a small purchase every six months and paying it off immediately to avoid interest charges and keep the card active in your credit mix.

4. Make sure different types of credit make up your credit mix. Credit scorers want to see a variety of available lines of credit under your name, coupled with low utilization rates. That can mean having secured debts (think mortgage), unsecured debts (credit cards, students loans), revolving debts (HELOC) and installment debts (personal loan) on your file. Just avoid store cards at all costs. Also known as instant in-store financing, this kind of credit line is tied to a specific retailer and it does not help your credit score.

5. Don’t open too many new lines of credit at once. That will signal to the credit scoring model that you’re struggling financially.


Here’s a step-by-step guide on the best ways to improve your credit score.

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