Anybody who has purchased a car or a home knows the significance and importance of that 3 digit number called your credit score. Lenders believe your credit score is the most reliable indicator of the risk they will be taking if they elect to lend money to you. Potential employers and insurance companies frequently look up your credit score to determine any risk associated with hiring you or to determine the cost of your policy and premium prices.
Now, for a moment, pretend you were about let somebody borrow money from you. What would you consider to be the two most important aspects of an individual’s credit worthiness? You would probably want to know if the borrower had been late on any previous payments AND you would certainly want to know how much they currently owe!
So it should come as no surprise that 35% of your credit score calculation is based on the number of late payments you have made AND 30% of the credit score calculation depends on your TOTAL DEBT.
The Equifax FICO credit score report (costs me $14.95 per month to have access to my credit history and credit score at myFICO) you see below lists the four elements of your credit score that the FICO algorithm considers most important. First on the list is payment history, second is Amount of debt, Third is the length of your credit history(Newly opened lines of credit can hurt your FICO credit score until they are given time to age), and fourth is the overall amount of new credit you have. A lot of new credit can indicate to mortgage companies and lenders that you are biting off more than you can chew.
The short summary of this article is to NEVER ever be late on a payment. If you have to be late, do not be more than 30 days delinquent as experian, equifax, and transunion keep track of whether you have been 30,60,90, or 120 days late with any of your payments. Also keep your overall debt as low as possible!
At the time of this writing, the average USA FICO credit score is 690.
Also will list some average FICO credit scores by state:
Texas : 669 , New Mexico: 676 , Arizona: 683 , California: 693 , New York: 702 ,
Florida: 675 , Nebraska: 713 , Pennsylvania: 706 , DC: 683 , North Dakota: 720 ,
Illinois: 696 , Missouri: 689 , Georgia: 663 , Ohio: 694 , Alaska: 695