An Average Credit Score Isn’t the End of the World. Here’s Why

Average. If someone uses the word to describe your kids, your intelligence or your looks, you’re probably not going to be too happy about it. But you shouldn’t necessarily be upset if the same can be said of your credit scores.

It turns out that the average American credit score isn’t actually all that bad. According to the most recent data from FICO, the average credit score for 2015 was an all-time high of 695 (though different scoring models, like VantageScore, for example, also exist and use slightly different methodology). That average falls into the area that a lot of lenders would classify as “near-prime” score — somewhere between 650 and 699 and pushing the “prime” classification (700 to 749)— though the exact scores considered near-prime and prime depend on the scoring model used.

That’s right. Prime. Like prime rib. Like Grade A Prime. Sounds a lot better than average, doesn’t it?

It’s Not So Bad Being Average

As a general rule, credit scores typically break down as follows:

  • Excellent Credit: 750+
  • Good Credit: 700 to 749
  • Fair Credit: 650 to 699
  • Poor Credit: 600 to 649
  • Bad Credit: below 600

Many lenders and credit scoring companies refer to credit rankings as super-prime, prime, near-prime and sub-prime. All of these classifications simply mean how risky they think it is to lend to you. Whether they call you an “average” or “fair” or “near-prime” borrower, it means your chances are pretty good for getting a loan for a new car or a mortgage at a good interest rate — or for being approved for a rewards credit card (here’s a simple guide to help you find the right credit card for you).

Being average means you’ve done a pretty decent job of paying your bills on time, keeping your credit card balances reasonably low in relation to your credit card limits and not overextending yourself with debt. Of course, it also means there’s room to improve your credit scores so you can get even better loan terms and credit card perks.

If you’d like to boost your credit scores to a higher level, or if you’re just not sure where your credit stands, you can start by checking your two free credit scores, updated monthly on Credit.com. It’s also a good idea to check your free annual credit reports at AnnualCreditReport.com to make sure there aren’t any mistakes or surprises that will lower your credit scores.

See? It’s not so bad being average after all.

More on Credit Scores:

Image: NYCstocker

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