Current average credit score in US?

[SOCALS]

Does anyone have any info on the current average credit score in US? Does it go lower in recession or is it graded on a curve? And if your score did not change but became higher than average due to the average going down, does it make you look better in the eyes of banks and such?

[Warpy]

1. Credit scores are getting to be totally irrelevant

since they don't measure solvency but increase when measuring the payment record on multiple debts.

I have no debt at all, so mine is in the toilet. Never mind that any loan I'd conceivably ask for would be completely secured by savings and portfolio worth.

One of my friends with five credit cards, an overmortgaged house, a shoestring business, two car loans, and negative net worth has a number that's quite high.

I expect to see them tossed out completely as a test for credit worthiness in a few years, to be replaced by an examination of income and real debt load. In other words, they're going to have to do their damn homework instead of looking up a handy dandy number.

[SOCALS]

2. Do you avoid credit cards and loans on purpose?

What's the point in pissing against the wind?

[blondeatlast]

3. Does there need to be a point? Maybe they just choose to live that way, yanno, like your

poverty-stricken drunk-driving neighbor. :shrug:

[BR_Parkway]

4. There's plenty of us who live without debt - it makes it nice to have

choices that don't depend on me making certain payments

[SOCALS]

5. How do you buy a car

without a loan that is not a piece of crap? In the long run, having credit history is good from an economic point of view

[BR_Parkway]

15. I make the car "payments" to my savings account, then write a check

if I want to get another one. I got lucky enough to get schooled by my first boss who was a self made millionaire. One thing he said when I was 21 that totally stuck in my head was never to finance anything going down in value or that you couldn't use to make money. Not being locked into a bunch of payments has made my life enjoyable and flexible.

[Warpy]

6. I was raised by Depression babies, allergic to debt

I took on two used car loans when I moved to this town to establish credit. I paid both off early. I then took on a small mortgage on a shabby fixer in a so-so neighborhood on its way up.

I had a credit card for about 2 years, covering the time I moved from Boston to NM. I cut it up and sent it in when junk fees and minimum monthly payments appeared and I quite rightly spotted the beginning of a scam leading to debt servitude.

Yes, it's been hard watching friends buy now, pay later and vacation in the Greek islands. However, I'm sleeping well at night and they aren't. I was able to keep my home through three years of total desperation because I had savings and only a small mortgage payment. I've bought used, thrift shop, and auction all my life and haven't been too proud to dumpster dive.

I saw all the things that led up to the Great Depression being repeated by conservative administrations in both parties. It scared the hell out of me.

The point in pissing against the wind and avoiding debt is having options now my friends don't have.

[Godhumor]

7. Don't have the numbers offhand, but, yes, recessions usually cause avg. scores to go down

More defaults on payments during economic struggles.

[SOCALS]

8. So if the difference between my score and the average increases

can I count on a better interest rate on a car loan etc?

[Godhumor]

9. Usually what happens is that a bank or lender will incentivize people...

who have maintained decent scores. Generally this means easier or faster approval and can also result in movement into a higher approval tier when being considered for a loan.

This tends to help those with "almost" excellent credit more than those who were already the highest ranked tier. Whereas before the highest tier might be considered for a score of, say, 750 or higher. After a recession the lender might decide that anyone who has maintained a 710 or higher through a recession has shown credit worthiness and the upper tier is temporarily adjusted to 710 or higher. Someone with a 750 is still top tier in both cases, but a 720 will bump from a B to an A.

[Statistical]

10. Fair Issaic (company that manages FICO score) says median hasn't changed and is still 724

http://www.creditmattersblog.com/2009/02/observers-say-that-average-fico-score.html

Remember median is different than "mean" which is what most people think when they say average.

Set of numbers
1 2 3 4 5

The average (mean) is: (1+2+3+4+5)/5 = 3
The median (50%) is: 3

Numbers change
1 1 3 3 4
The average drops to 2.4
The median (50%) is still 3

So it is possible the median is still 724.
The distribution may simply have changed.

More importantly FICO shows how the numbers are distributed.


The distribution tends to be right weighted with a long tail to left.

This means a 50 point gain between 600 and say 650 is a big deal however a 50 point gain between 720 and 770 is pretty much meaningless.
Generally above 720 is going to put you in the same boat as someone with an 800 (there may be some exceptions when lender has prime and prime+).

[SOCALS]

12. So do they care about the average at all?

[Statistical]

13. Not really.

The numbers are independent of the average (and FICO only publishes the median = middle not mean = average).

Generally for prime you are going to need 700+. Some lenders may be picky wanting 720 and some (like car lender may be looser and want 680).

If you qualify for the best rate having "more credit" i.e. 720 vs 800 isn't going to do you any good.

When I sold cars for GM anyone with a FICO of 700 (680 w/ good mortgage) could get 0%. Having a 850 (top 0.1%) isn't going to get you a better deal than someone with a 700. If that makes sense.

[ORDagnabbit]

11. its a game with made up number and rules..

[goldcanyonaz]

14. I wish they would get rid of credit scoring.