Credit Score Update - Credit scores are soaring high

 

Consumers are increasingly dependent on credit cards to make ends meet, but this has had little influence on their financial situation – at least not in terms of credit rating.

 

According to a recent report from FICO, producer of one of the most frequently used Credit Scores, the national average credit score is at an all-time high of 716, unchanged from a year ago. FICO scores vary between 300 and 850.

 

According to Ethan Dornhelm, FICO's vice president of scoring and predictive analytics, this is the first time since the Great Recession that scores have not improved yearly.

As customers took on additional debt, their credit scores remained stable.

 

There's little doubt that Americans' debt levels increased when prices rose across the board.

 

Despite this, Borrowell Credit Score Canada have remained stable despite the substantial rise in the cost of living, which has prompted more consumers to rely on credit, credit card balances to grow, and missed payments to rise.

 

The average credit card use in April 2022 was slightly over 31%, up from 29.6% the previous year.

 

One of the numerous elements that might affect your credit score is your usage rate, which is the ratio of debt to total credit. To avoid the impact of high balances, credit experts typically advise borrowers to maintain revolving debt below 30% of their available credit.

 

What is considered a "good" credit score?

 

In general, the higher your credit score, the greater your chances of obtaining a loan. You have a better chance of being authorised, and if you are approved, you might qualify for a reduced interest rate.

 

A good score is normally more than 670, a very excellent score is greater than 740, and anything greater than 800 is regarded extraordinary.

 

An average FICO score of 716 indicates that most lenders will consider your creditworthiness "excellent" and are more likely to provide lower interest rates.

 

During the housing crisis more than a decade ago, when foreclosures were on the rise, the average US credit score fell to 686.

 

Minority credit score gaps persist.

 

However, these growth patterns are not uniform.

 

According to a second Urban Institute report based on Vantage ratings, young individuals in majority-Black and majority-Hispanic regions had lower average credit scores than their white counterparts. And their credit ratings are more likely to decline over time.

 

From 2010 to 2021, about one-third, or 33%, of 18- to 29-year-olds in majority-Black towns and more than a quarter, or 26%, in majority-Hispanic communities had their Best Credit Score decrease, compared to just 21% in predominantly white regions.

According to the report, young adults between the ages of 25 and 29 in majority-Black communities have a median credit score of 582, just above the range considered poor, compared to those in majority-Hispanic communities, who have a median score of 644, and those in majority-White communities, who have a median score of 687.

 

"These credit discrepancies are the result of decades of discriminatory policies that have denied communities of colour equal access to cheap financial services and chances for wealth-building."