699. That’s the nation’s average FICO score, which sits at an all-time high.
While the upward trajectory is encouraging, the unfortunate truth is that Americans are generally falling short of what’s considered a “good” credit score, i.e., a credit score of 700 or higher.
Improving your credit score can mean the difference between reaching your financial goals and falling hundreds of thousands short.
For example, people with excellent credit qualify for mortgage rates that are up to 1.5 percentage points lower than someone with poor credit. In dollars and cents, that’s a savings of $102,240 over the life of the average 30-year fixed-rate mortgage*.
FICO score essentials
FICO scores are used in 90% of lending decisions, including when getting pre-approved for a mortgage, securing an auto loan, or even signing up for a credit card.
The driving factors of your FICO score can be broken down into five categories, which are weighted as follows:
- Payment history (35%)
- Credit utilization (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
We’ve highlighted several valuable credit score articles and videos below, which can help get you on the path to mortgage savings by uncovering simple, actionable steps you can take to increase your credit score.
Increase your credit score
*Average new home purchase of $309,000. Current 30-year fixed mortgage rate of 4.31% versus 5.81%. Mortgage rates as of 3/8/17. The Motley Fool has a disclosure policy.
– Stock investment