How Does Your Credit Score Compare to the Average? – msnNOW

Provided by The Motley Fool How Does Your Credit Score Compare to the Average?

Credit scores affect your ability to borrow, your cost of borrowing, and all kinds of transactions with any company that checks your credit.

Since these scores are so important, it's important to know what yours is. It can also be helpful to know where you stand relative to your peers.

Fortunately, new research from The Ascent is packed with information about credit scores in the United States. You can check out how you compare to the average American, as well as people in your age group and your state. And if your score is below average, we also have some tips to help improve it so you can excel when it comes to credit.

According to The Ascent's data, the average FICO Score in the United States hit 704 in 2018. This is a four point increase from 2017 and a 14 point increase from the average score a decade before. It's also considered to be a good score that would qualify the average American for loans at reasonable rates from most lenders.

We also looked at the average FICO Score by age. Those who are 60 and over have the highest average of 747, while pre-retirees aged 50 to 59 have an average score of 713. Both of these scores are considered good to excellent.

Younger Americans tend to have lower average scores than their older counterparts, though. Young adults aged 18 to 29 average a score of 659, while adults age 30 to 39 have an average score of 677. Americans between the ages of 40 and 49 have an average score of 690.

The Ascent's research also revealed that the average VantageScore was 694 as of the first quarter of 2018. VantageScores are an alternative to FICO Scores. FICO Scores are determined using a formula created by the Fair Isaac Corporation, while VantageScore's formula was developed in 2006 by Equifax, Experian, and TransUnion.

If your score is below average, you may have more trouble getting approved for financing and you may have to pay above average rates for credit cards, personal loans, or other types of financing.

But you don't have to just accept a lower score. You can be proactive and take steps to try to increase it. To do this, you need to understand that your score is based on a number of factors: your payment record, how much of your available credit you use, the age of your credit history, the types of credit you have, and how many inquiries are on your credit report (inquiries go on your report when you apply for new credit).

If you can improve your payment history by making payments on time and paying down debt, you can hopefully earn a score that's at least as good as the average Americans -- or perhaps even better.

Knowing how your score compares can help you to determine where you stand when it comes to your credit -- and whether there's room for improvement. Hopefully, your score is above average or at least equal to it. But if not, responsible behavior can boost it over time and put you on par with your peers. Then you'll be able to qualify for competitive financing from a lender of your choice.

The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. Were firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. SPONSORED:

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How Does Your Credit Score Compare to the Average? - msnNOW