Americans and Credit Scores
In America of the present, one may see credit scores as a basic component of financial life. These three-digit figures are rather important regarding the availability and prices of credit as home loans, auto loans, credit cards, and other types of credit all include credit scores to different degrees.
Created by Fair Issac Corporation, the most often used credit scoring system in the United States is the FICO Score. FICO scores range from 300 to 850; higher levels indicate a person is less likely to fail on credit accounts. But what about the proportion of Americans whose credit ratings are in the good to outstanding range? Specifically, how many have passed the important 700 mark?
The 700 Credit Score Milestone
Having a FICO score of 700 or higher is usually regarded as a good or even perfect credit score. With a credit score of 700+, one is more likely to get authorized for credit under the best terms and at the lowest interest rates. Those with scores below 700 are among the accepted candidates; yet they are often charged exorbitant rates, higher fees, and other things.
Therefore, if one wants to enjoy or get the most affordable credit goods available, a credit score of 700 or more is perfect. Recent statistics, however, reveal that only a tiny fraction of Americans have attained this important credit level. According to Consumer Financial Protection Bureau data, little under 48% of customers with credit histories have FICO scores ranging from 700 to above. Only 52 percent have scores higher than 700.
Further classification shows that between 700 to 749, about thirty percent of Americans with credit scores fall into the "Good" group. About a 13 percent increase to the 750 to 799 FICO "Very Good" category. With scores ranging from 800 to 850, almost five percent of the pupils fall into the highest subcategory designated "Excellent."
About 22 percent of people at the bottom end of the spectrum have FICO scores between 650 and 699, FICO describes as "Fair." They may therefore get the loans even if they are not ideal for the best interest rates. The remaining thirty percent of Americans with FICO scores below 650, however, would have trouble finding reasonably priced credit or might not acquire any credit at all.
Over 60 Million Americans have scored above 700
If the above percentages are to be used, then it can be deduced that more than 60 million American adults have scored above 700 on their credit scores. That is a big number but is still a small representation of more than 210 million consumers in the United States with FICO Scores. The data in the Consumer Financial Protection Bureau is as of Quarter 4 of 2021, so the numbers may have slightly changed but not considerably.
It also should be noted that 48 million American adults have no credit history with at least one of the three major consumer reporting agencies. Following that, another nine million are reported to have “unscorable” reports because their data is outdated or they lack sufficient credit history. That means roughly 70 million people in the US are completely unbanked, and don’t even have access to credit scores.
Why 700 Matters
But why is that 700 FICO Score level so significant? FICO Scores generally fall into the following categories: FICO Scores generally fall into the following categories:
800-850 Exceptional Credit 740-799 Very Good 670-739 Good Credit 580-669 Fair Credit Below 580 Poor Credit
As you can observe, a rating of 700 places a person firmly in the Good Credit category. As a rule, applicants with Good FICO Scores and even higher can take conventional mortgages under any circumstances with the only exception of debt to income ratio. The 700 credit score buyers also stand a better chance to be approved for 0% intro APR credit card and balance transfer.
The consumer with a 600s FICO Score will need to pay higher mortgage rates, use auto loan gap insurance, and pay a lot of money for credit cards with no 0% intro APR offers. That makes attaining the status of a 700 credit score quite desirable for many Americans who wish to lower the price of credit and financing.
The Path to 700
If you have dreams of buying a home, saving on credit card interest, or just securing emergency credit when needed, what’s the best path to join the 60 million Americans with FICO Scores of 700+? Here are a few tips that may help: Here are a few tips that may help:
- Check credit reports at least once a year and challenge any incorrect information there to the three credit bureaus. One has to understand that mistakes can affect credit ratings.
- To improve your credit score, pay all the bills that are due every month on time. It contributes 35% of the FICO Score, which is the payment history.
- Do not exceed 30% of the card’s credit limit when using your credit card. High balances hurt scores.
- Try not to apply for new credits as often as possible. However, utilization of credit cards and other credit tools, excessive use can result in the lowering of scores for some time due to many hard inquiries.
- It may be useful to request creditors to remove negatives that are not the result of delinquencies through goodwill adjustments.
- Use a combination of credit products once a score has been set.
Having good FICO Scores therefore will not fundamentally predict credit approval. Lenders also consider debt to income, down payment, employment, and other attributes as well. Nonetheless, is getting a credit score above 700 not a positive step towards attaining better rates and favorable terms
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