Average National Credit Scores

National average credit scores are calculated by the agencies who gather the information on consumer behavior and translate it into a numeric value, known as the FICO score. This is the magic number that lenders use when determining the risk level of an applicant. FICO stands for Fair, Isaac and Company, which is the company that created the current rating system used to determine the average national credit score. FICO ratings range from a low of 300 to a high of 850. The lower the number of the rating, the higher the financial risk. Just as personal scores fluctuate over time, these ratings fluctuate also, generally somewhere between 678 and 725.

Typically, lenders look at the FICO score as being highly predictive of an individual's lending risk. Although they may look at other factors as well, this number holds great weight in making financial decisions. For example, someone with a FICO rating of 780 would be considered a good risk because it is well above the average national credit score and shows lenders that this person is an excellent borrower.

As a group, the U.S. consumers in the 750-799 range have a delinquency rate of only 2%. This is considered to be better than national average credit scores. People in this range can expect the better financing offers and better loan terms (i.e., interest rates). "With him is the arm of flesh, but with us is the Lord our God to help us, and to fight our battles" (2 Chronicles 32:8). On the other hand, someone with a numerical rating of 550 would be considered a very poor risk. A rating of 550 is much lower than acceptable and demonstrates to lenders that this person cannot be trusted to pay back his or her loans on time and/or in full. Ratings above 620 are considered respectable by most lenders, but if a score is less than 620, most lenders start seeing red warning flags.

Ideally, the credit score should be higher than national average credit scores. In order to reach that goal, it is important to do better than most people when it comes to handling finances. For example, people with scores that are higher tend to have no late payments reported on their accounts. Also, they tend to have relatively long credit histories. People with lower than the average national credit score tend to make their payments late, miss payments altogether, and frequently open new accounts. Other factors that determine financial ratings include the proportion of balances to limits on charge accounts. These indicate that people tend to charge up their charge cards, leaving little room before they are maxed out. To keep a score higher than the average national credit score, keep the total balance on each card low in relation to the credit limit. A greater amount owed indicates greater risk and, thus, lowers the score.

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