FICO released their update in April; stating that the average FICO score among American consumers has hit an all time high at 692; six points from October 2009's score of 686.
Looking at other statistics, mainly since the recession, we see that consumers are not acquiring as much debt; lenders are not extending credit to those with a lower credit rating, and the younger generation – millennials – aren't partaking in the credit world at all; thus it's no wonder the average score has increased.
Anthony Sprauve, senior consumer credit specialist at FICO, attributes the increase to consumers “paying more attention to their finances. “They’re more educated and more aware, and I also think there are fewer confusing financial products in the marketplace.” Hmm… If lenders are have decided to only work with persons who have a good to great credit score, while others with a poor to fair credit rating being left in the dark; obviously the average scores would increase. Those with good credit have more options to obtain additional credit, which improve their credit rating, while those with less than perfect credit are shut completely out.
Since the recession, the sub-prime lenders have been ‘ghosts' for the most part; meaning those with a FICO score of 620 and under have had a hard time getting approved for a loan at a decent interest rate with agreeable terms. Thus, they've either given up their quests, have started using cash only, or have put things on the back burner until they can improve their credit. If you shut certain consumers out of the market place; of course the averages will increase.
This past recession caused lenders to be more cautious of extending credit to persons with a less than perfect credit score; and it taught consumers to be less trusting that their lending ‘expert' will provide them with a financial product that is truly in their best interest.
The take-away message? It's URGENT that you take the necessary steps to achieve a good credit score! Credit affects every aspect of our lives and if home ownership; owning a vehicle, obtaining a cell phone, utilities, employment are important to you… the time to fix your credit is NOW! Pull your credit report from www.annualcreditreport.com; see what items you need to tackle. Create a game plan; financial education is the key.
If you need assistance, please do not hesitate to contact us; we'd love to help! For an overview of our credit restoration services; check out our video under “About MNHCS“.