What is a good score? Ideally you’d have a perfect credit score of 850 but it would have the same effect on your interest rates or amount of credit you can receive as a score of 720. What is a bad score? Well, there’s no universal score where no lender will grant you any credit but it your score is below 620, you might feel the strain from higher interest rates.
300 is the lowest possible credit score and 720 is the lowest good score you can have. The average credit score as of Mach 2008 nationwide is a 692 with South Dakota the state scoring highest with 71- and Texas the lowest with 655.
The ways in which American’s scores are most being effected is by carrying too much debt relative to debt and missing monthly payments. To keep your score up, you want to apply the 28/36 rule which is that a monthly mortgage payment should not be more than 28% of your monthly gross income and the rest of your debt should not be any more than 36% of your gross income.
The average American’s credit score is a 692 which when compared to the good score of 720 doesn’t sound that bad, right? Unfortunately lenders determine what constitutes a good score and after the the 2008 mortgage crises what was considered a good score that would result in a good interest rate was lowered from 680 to 720. Because of this, the average American is considered a sub-prime borrower.