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Much like the stock market, the average FICO credit score has been rising since 2009 and recently hit a new high.
According to the latest data from Fair Isaac Corp., aka FICO, the national average FICO credit score reached 704 in April. That’s up from 700 one year earlier and up from 686 in 2009. It’s also a record high.
This upward trend holds true for all age groups. FICO reports that for each group it examined, the average score has increased by four or five points over the past year.
The average score by age still varies widely, though, with the youngest consumers having the lowest scores and the oldest consumers the highest scores. The average FICO credit score by age is:
- 659 for ages 18-29
- 677 for ages 30-39
- 690 for ages 40-49
- 713 for ages 50-59
- 747 for ages 60 and older
Why credit scores are rising
FICO attributes the continued increase in the national average credit score largely to fewer folks having scores of less than 550 and more folks having scores of 800 or higher.
A key factor in this is that fewer consumers have negative marks on their credit history. Specifically, FICO reports 23 percent of consumers had at least one collection agency account as of April. That’s down from 25.8 percent last year.
If you’re among that 23 percent, consider seeking help from a reputable credit expert.
How to increase your score
The first step in improving your credit score is knowing where it stands. If you haven’t checked your score recently, check out:
- “6 Ways to Get Your Official FICO Credit Score for Free“
- “6 Companies That Give Free Credit Scores to the General Public“
Once you know your score, you need to understand what goes into it.
The most commonly used FICO credit scores are most heavily influenced by payment history — which accounts for 35 percent of such a score. Lenders use your payment history to weigh the risk it would take by extending credit to you.
Payment history refers to whether you’ve paid past credit accounts on time, FICO says. These accounts include:
- Credit cards, including retail credit cards
- Installment loans, such as car loans
Payment history is more complex than simply whether you’ve made a late payment or missed a payment, however. FICO scores consider the following about delinquencies:
- How late they were
- How much was owed
- How recently they occurred
- How many there are
Your payment history will also reflect certain negative legal events, such as filing for bankruptcy protection — a black mark that remains on your credit report for seven to 10 years.
Lastly, payment history reflects the number of accounts that show no late payments. This means that a good track record of timely payments will help increase your credit score.
“A few late payments are not an automatic ‘score-killer.’ An overall good credit history can outweigh one or two instances of late credit card payments.”
For other ways to better your credit, check out “Boost Your Credit Score Fast With These 7 Moves.”
So, how does your credit score measure up to the national average? Share with us by commenting below or over on our Facebook page.