The FICO scoring method forms the basis of credit scores provided by the three main credit bureaus in the United States. A FICO score has a range between 300 and 800. The key influencing factors that affect the national average credit score include the number of credit cards owned by consumers. A little less than half of the population of the US has at least two credit cards and ten percent of the total population of the US has in excess of ten credit cards. Approximately, 16% of US citizens use up around 50% of the credit available to them. These users carry around 4.6 credit cards per person. Individuals with credit card utilization of around 50% have a national average credit score that is around 40 points lower than the overall national average credit score.
The three major credit scoring agencies use scoring systems that are derived from FICO and there are some differences in the national average credit scores issued by Empirica, TransUnion, and Experian. Therefore, when approaching a lender, it is important that an individual verifies whether his credit score is calculated by the same method as used for arriving at the national average credit score.
The national average credit score is released every month and it acts as a pointer for the health of the finances of the country and the states. It indicates patterns in consumer credit behavior such as credit utilization and average debt. It helps to set the credit interest rates, a higher national average credit score would imply a low overall credit risk for creditors and would perhaps be the right time for an individual to avail a loan.
A person with a credit score that is lower than the national average can get credit at lower interest rates, awareness of the national average credit score is the first step in taking an informed decision on one’s credit requirements.
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