Despite the financial turmoil that many Americans have experienced since the COVID-19 pandemic hit the US, credit scores continue to climb — reaching their highest level in 13 years this year, according to a new report from Experian.
Experian’s 12th Annual Credit Profile Report tracks VantageScore credit scores, developed by the credit bureaus Experian, Equifax, and TransUnion, on a scale from 300 to 850, the same as the FICO credit score range. Overall, before the COVID-19 pandemic, the average US VantageScores increased to 695 from 688 last year and 682 in 2019.
While overall scores have risen, the gaps between states and territories remain wide. For example, consumer credit scores in the South continue to lag in the Midwest and New England. Mississippi residents have the lowest average credit score this year at 666, the report shows. Minnesota residents again had the highest average credit score at 726.
The nationwide jump was partly due to fewer missed payments by consumers, as well as lower credit utilization and lower balances. According to Experian, the average credit card balance is now $5,525, down from the pre-pandemic average of $6,494 in 2019.
Recent increases in credit scores from VantageScore and FICO could have a significant impact on consumers’ current and long-term finances. “From housing and employment to healthcare and education, credit can be used to improve our overall quality of life,” said John Hope Bryant, founder, and CEO of Operation HOPE. The financial literacy nonprofit partnered with Experian this year to produce the HOPE Financial Health Index, which will be updated regularly.
Slightly more than a quarter of consumers with a credit score below 550 said they had trouble renting and had low credit, according to a survey late last year by up-and-coming credit bureau Credit Seseam (similar to Credit Karma) 22% of people were denied a cell phone plan.
Even modest increases in credit scores can put money back in consumers’ pockets.
For example, if a consumer’s secondary credit score improves by about 35 points from 660 to the national average of 695, it can save an average of $301 a year in interest charges, according to an analysis by bill payment service Doxo.
Consumers looking to improve or maintain their credit scores should check their credit reports regularly, said Rod Griffin, senior director of consumer education and advocacy at Experian. “Understanding what information your credit report contains and how it affects your credit score is one of the best ways to protect your financial health,” he adds.
Debt repayment and on-time payments often have the biggest impact on people’s credit scores, but consumers can also sign up for programs like Experian Boost services (which require consumers to submit their data) and UltraFICO Score (which uses other alternative data such as payments). Experian’s program allows consumers to add payment history for utility, phone, and cable bills to their credit reports, while UltraFICO links checking and savings accounts so that positive account balances can be considered.
Let’s take a look at the average credit score of US residents in each state
As in previous years, Minnesota has the highest average credit score in the nation, according to Experian data, with residents scoring an average of 713 in the “good” range of 670 to 739.
This annual credit report and state rankings are based on Vantage scores, which range from 300 to 850. South Dakota, Vermont, New Hampshire, and Massachusetts also made the top five with the highest average credit scores in 2018.
On the other hand, residents of the southern states have the lowest average credit scores. The lowest score of 652 came from Mississippi. Louisiana, Nevada, Georgia, and Texas were also at the bottom of the rankings, with an average score of 659 or lower.
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“Historically, the South has consistently scored lower than the Midwest and North,” said Experian’s director. “While this may be a combination of economic circumstances and different cultures, the percentage of Southern residents with available credit is the Consistently higher than the rest of the United States.”
There are key elements to every good credit score: You must pay your bills on time every time, and you must keep your balance as low as possible.
Car insurance costs, home loan interest rates… your credit score can affect a lot!
Buying auto insurance is the same as taking out a credit card and taking out a loan, and your credit score will be checked. That’s because auto insurers use credit scores to assess the chances of an underwriter filing a claim. If the credit score does not meet the standards of the insurance company, they may have to pay relatively high premiums; it is recommended that drivers with low credit scores make more inquiries from different insurance companies to have a better chance of finding suitable insurance companies and premiums. Rate.
In addition to the lender’s credit score, the most important things that loan companies consider are the debt to income ratio and the amount of down payment they plan to put in. However, even if the credit score is the same, the interest rates given by different Loan companies are still different, and sometimes the difference is even more than 1%. It is recommended that you shop around and ask for quotes from different Refinance companies.