The average credit score for Americans recently dropped by one point from 718 to 717, according to FICO. Despite this slight decrease, a score of 717 is still considered to be “very good” according to the VantageScore model. Credit scores can range from 300 to 850, with scores falling into different categories such as very poor, poor, good, very good, and exceptional. When broken down by age, it is evident that most Americans have a good credit score. Generation Z has an average score of 665, millennials average 687, Generation X are at 710, baby boomers at 746, and the silent generation at 750.
Many factors are taken into consideration when calculating a credit score, including payment history, amounts owed, credit mix, and how often new lines of credit are opened. It is to be expected that older generations tend to have higher scores due to their longer history of establishing and maintaining credit. However, Generation Z and millennials are more likely to move up to a higher credit tier at a faster rate than older generations. This information was reported in OpenLending and TransUnion’s “Financing the Future” report. To improve your credit score, it is advised to pay down debt and to ask your lender to increase your credit limit.
Increasing your credit limit can help improve your credit utilization ratio, which is the amount of your total available credit that you’re using. It is important to keep your credit utilization rate below 30% to avoid negatively impacting your score. Schulz also advises against spending up to your new credit limit if it is granted. Consistency is key to maintaining a healthy credit score, which includes paying bills on time, keeping balances low, and not applying for too much credit too often. By following these guidelines consistently over time, your credit should remain stable and in good standing.
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