The desire to know what your credit score is in comparison to the national average may be fueled by an innate interest to understand where you fall in comparison to others or it may be motivated to understand what it takes to qualify for a loan. As we’ve written before, all credit scores range from 300 to 850; the majority of people fall into the 600 to 800 range. Experian, one of the three major credit reporting agencies, produces the Experian National Score Index formulated using the Experian-developed PLUS Score.
Experian does this to educate consumers about credit and the score is designed to give consumers a better understanding of how their credit compares to that of other U.S. consumers. The Experian National Score Index provides results based on data collected from a representative sample of three million U.S. consumers’ credit profiles. As of November 2009, the Experian National Score Index was 692. This number varies year by year and may also vary by the location where you live.
Experian also reports the national average credit score by region with New England having the highest average at 712 and West South Central the lowest at 683. Further, the city with the best credit score is Minneapolis with 705 and the worst is Dallas at 650. Other indicators reported by Experian on a U.S. regional basis are:
- Debt – Average amount of money owed per individual on revolving credit accounts including credit cards and fixed payment accounts such as auto loans, yet excluding mortgage payments.
- Credit usage or Credit Utilization – Average percentage of debt owed compared to the credit limit on revolving accounts
- Minimum Monthly Payment – Average minimum amount due on a monthly basis to satisfy all monthly loan obligations. This amount excludes real estate loans and any financial obligations typically not found in a credit file such as rent, utilities, insurance.
- Open Credit Cards – Average number of open credit accounts or credit accounts on record including bank cards and retail cards.
- Late Payments – Average number of accounts that are currently passed due, at least by one payment or more.
- Credit Inquiries – The average number of credit reports requested by lenders within the last two years for loan applications.
As credit becomes more and more difficult to obtain after the sub-prime mortgage crisis and the subsequent meltdown of the financial markets, consumers are becoming increasingly conscious about the importance of maintaining a high score. Normally, a score ranging from 720 to 750 will take you to the good books of lenders thereby giving you the ability to obtain the lowest interest rates. Generally, if your score is below 720, interest rate begins to rise. The best way to increase your score is to make monthly payments on time and have a low credit utilization percentage. Moreover, do not apply for too many credit cards which will increase the temptation to borrow money (assuming you are approved for the cards), in turn hurting your chances of rebuilding your credit score.
Depending on what you intend to utilize your credit for, it may be wise to find out how you stack up to other U.S. consumers and/or those in your region. This could be an ideal starting point to improving your credit.
Published or updated August 3, 2011.