People in the south may enjoy warmer weather Although the highest credit scores are on the rise North, according to a new FICO report. The nine states with the highest average credit scores are all in the North, followed by Minnesota (742), Vermont (739), New Hampshire (737), Wisconsin (737), Massachusetts (736), and South Dakota (736). , North Dakota (735), Washington (735), Nebraska (734). Hawaii earned her 1 spot in the tropics with her 10th ranking (733).

“Residents of these states are more likely to have fewer recent outstanding payments and are less likely to seek out and open new credit, all of which are positively reflected in their FICO scores.” “It’s an action that’s going to take a long time,” explains his FICO report.

West is the best, but there are also northern bends to cities with the highest credit scores. The San Francisco Bay Area has the highest average credit score (746) among metropolitan areas. Minneapolis/St. Next is Paul (744), then Boston (742), and Long Island, NY (739). California holds the final spot in the top five with Orange County (738th). The national average FICO score is 716.

What counts as good credit?

Generally speaking, a credit score of 740 or higher is considered excellent. The FICO scale goes all the way up to 850, but reaching the mid-700s should give you the best approval odds and qualify you for the lowest interest rates on loans and lines of credit. Lenders generally do not distinguish between a credit score of 770 and 800 and a full 850.

Although a credit score between 670 and 739 is generally considered “good,” there is an important difference. wider range. As this his FICO chart shows, a person with a 670 credit score can expect her 6.349% payout for a 30-year fixed-rate mortgage. For a $300,000 loan, monthly principal and interest payments equate to $1,867.

A borrower with a credit score of 690 could get about a quarter of her 1 point lower interest rate. At 6.135%, her $300,000 loan for 30 years would cost him $1,825 per month. This is $42 cheaper than the previous example. Multiplying 360 months on a 30-year loan yields a total interest savings of $15,120.

If you get 20 more points and you're at 710, your rate will be an estimated 5.958% (in this example, your monthly payment is $1,791). And if your credit score is between 760 and 850 and you have access to the best rates, your monthly payments could be as low as $1,748. Credit score 670. This helps explain why your credit score is one of the most important numbers in your financial life.

Strong credit score

In general, establishing and maintaining a top-notch credit score requires long-term discipline. It's a marathon, not a sprint. Show that you can pay your bills on time, keep your debt low, and manage different types of credit well over the long term. That said, there are some things you can do to improve your credit score relatively quickly.

My favorite tip is to lower your credit utilization. This is the credits you are using divided by the credits you have available. This is usually calculated on the date of your statement, so even if you pay the bill in full and avoid interest, you may still have high occupancy.

It is often recommended to keep this ratio below 30%, but in reality it is a sliding scale. According to FICO, people with the best credit scores often have less than 10% credit utilization. This is better than 30% and better than 50%.

A credit utilization rate above 70% is particularly harmful. FICO reports that approximately 15% of all US adults are using most of their available credit. Only 11% of states in Minnesota, Vermont, and Wisconsin do so, which certainly contributes to their high position in the state rankings. You can reduce your credit utilization by making an extra payment in the middle of the month or requesting a credit limit increase.

Another great way to boost your credit score quickly is to sign up for another credit monitoring service like Experian Boost or eCredable Lift. They bring information to your credit report that was previously uncounted, such as certain rent payments, streaming services, utility bills, and more. According to Experian, his average Experian Boost user improves his score by 13 points.

Another idea is to be added to someone else's credit card account as an authorized user. For example, if one of your parents' girlfriends has added you to their account and is using it responsibly, that positive behavior could come through to you. Negative information can hurt people, so act with caution. But if done right, it can be an effective tactic to improve your credit score exponentially, especially if you're relatively new to the world of credit scoring.

Conclusion

Over the past few years, average credit scores have been stable, but storm clouds are gathering. According to the New York Federal Reserve, total American debt has increased by about 8% over the past year. During that time, credit card balances increased by a record 15%, and average credit card interest rates are at their highest point since tracking began in 1985. Delinquency rates have also started to rise for various financial products, especially auto loans.

There is only one place where the unemployment rate can rise from here, and a recession in 2023 is about Two thirds.

I don't mean to be alarmed, but be aware that it is likely that this recession (if it does occur) will be relatively mild (especially in 2009, when I Compared to the double-digit unemployment rates we endured in 2020). It's a particularly good time to practice the basics such as These good habits will help keep your finances on track and boost your credit score in good times and bad.

Have a question about your credit card? Email us at [email protected] We are happy to help.