What is your credit score based on and what’s the average American credit score nowadays? How would you fare in comparison with your fellow Americans? Will be your rating higher or lower than the average American credit score? Just about everybody knows that there is such a thing like a credit score and that it is according to your past credit performance, but not many people really know the how to go about credit scoring.
First of all, the very best credit score that exists is 850; conversely, the cheapest is 300. Of course, many people fall between those two extremes, and in reality, the average American credit score has become about 690, but with the tough economy and unemployment on the rise, it is likely that individual credit scores will begin to fall, and that means the average credit score will start to fall right along with them.
However the average American credit score seems pretty high, at 690, that is certainly really not “good enough” to get the best credit terms from most lenders. Most banks and other lenders utilize credit history and credit score to determine whether or not they will lend you money, whether or not they will require collateral from you, how much interest they will charge you, and how long they will give you to repay your loan. Obviously, the better your rating, the higher deal you will get at the bank.
Nevertheless, there are no hard and fast rules that are uniform across the banking industry, most financiers reserve the best rates if you have a score of 720 or better. This means that if you are just average (690, remember?), you’re not likely to qualify for the best interest rates and terms. Naturally, the policies of the different institutions vary, and right this moment, a lot of bankers are turning down requests for loans if you’re well below the average American credit history, and traditionally, even in the very best economy, a score under about 620 would get you the total worst deal.
Some economists predict that within a few years, however, the lenders will be not able to be as particular about whom they feature loans to and will have to be a bit more flexible about terms; the notion revolves around the fact that banks generate income by lending it out. That is the fact; that is why they do it; they don’t really lend you money just to make you smile. That being the case, they have to lend, and if the average American credit rating drops significantly, banks will have fewer options. But that period will not come very soon or perhaps the immediate future; right this moment.
When the economy is tough, the banking industry gets more conservative rolling around in its policies; if you are in the market for a big-ticket item for instance a house or a car now (or is going to be soon), you should make every effort to maintain credit history on the up or over so you can stand out as better than average and can get yourself the best bargain possible when you need to borrow money.
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- Why Credit Scores Reign Supreme in Today’s Economic Climate (creditloan.com)
- How Your Credit Impacts Your Auto Insurance Rates (autoinsurance.org)
- Bad Credit May Not Necessarily Be a Problem (applyforacreditcard.com)