The average credit score has dropped for the first time in a decade — how does yours stack up? | CNBC
Hey there, high school and college students! Let’s talk about something that might not be on your radar yet but is super important for your financial future: credit scores. Recently, there’s been a bit of a shake-up in the world of credit scores, and it’s worth paying attention to.
For the first time since 2013, the average FICO score in the U.S. has dropped slightly, from a record high of 718 in April 2023 to 717 in October 2023. FICO scores range from 300 to 850 and are a big deal because they’re used in 90% of lending decisions. A score of 717 still falls into the “good” category, which is great news, but why the drop? Experts point to high-interest rates and persistent inflation leading to more missed payments and increased debt levels.
Now, if you’re thinking, “What if my credit score isn’t so high?” don’t worry! There are credit cards designed for people with lower scores. For instance, the Discover it® Secured Credit Card is great for building credit, and it even offers cash back rewards. Plus, after seven months, you might qualify for an unsecured line of credit. Another option for those with fair credit is the Capital One QuicksilverOne Cash Rewards Credit Card, which offers 1.5% cash back on purchases.
Improving your credit score is doable. Paying bills on time is key since payment history is a major factor in your FICO score. You can also boost your score with tools like Experian Boost™, which adds on-time utility and subscription payments to your credit report. And always keep an eye out for errors on your credit report – they can drag your score down unfairly………..
[read more]
Rising Dough
In the dynamic world of personal finance, understanding credit scores is crucial. How might the recent changes in average credit scores impact consumer behavior, especially among young adults just starting to build their credit history? Consider how this shift could influence their decisions in managing debt, applying for loans, and using credit cards.
*Click on the “Full Loaf” icon to read the full article! After you read the full article, let us know your thoughts.
Share this content:
The recent changes in the average credit score will have a large impact on consumer behavior. The reason for this is that the score being lower will mean that people cannot afford the higher quality loans that they could have received when the score was higher. The shift will change decisions in managing debt, applying for loans, and using credit cards by having people borrow less money because they cannot afford it. The flow of money from loans being slowed down could lead to the transfer of money being decreased because people will not be able to take out as much money due to them not being able to afford it.
I completely agree with this answer. In addition to this, banks and businesses that offer loans will start to see a decline in customers who take out loans of large sums and length of monthly installments to be paid back will also decrease. Banks earn interest on the securities they hold and without them profits won’t be as high as they once were.
Absolutely, the changes in average credit scores can have a big impact on consumer behavior. For young adults, a higher average score might make it easier to get loans at better rates, which could encourage them to take on more debt or use credit cards more confidently. On the flip side, if scores trend lower, they might be more cautious and focus on building their credit through responsible use, like paying bills on time and keeping balances low. This shift can also influence their approach to managing existing debt and could lead to a preference for credit products that help build credit history without high costs.
Young adults might become more cautious with their credit card use and debt management. They might also shop around more for loans to ensure they’re getting terms that reflect their creditworthiness.
The recent increase in average credit scores could encourage young adults to pursue more favorable loan terms, take on manageable debt, and use credit cards responsibly, thereby fostering financial responsibility and enabling them to access better financial opportunities earlier in life.
The changes in average credit scores can have a big impact on consumer behavior. A higher average score might make it easier to get loans at better rates, which could encourage them to take on more debt or use credit cards more confidently. On the flip side, if scores trend lower, they might be more cautious and focus on building their credit through responsible use, like paying bills on time and keeping balances low. This shift can also influence their approach to managing existing debt and could lead to a preference for credit products that help build credit history without high costs.
Young adults will likely not be as impulsive as they realize the consequences of asking for loans that they can’t pay back, they will make smarter decisions and not ruin their credit as when that happens it’s quite difficult for them to build it back up.
The changes in credit scores could be very drastic because considering whenever you apply for some type of credit anywhere people usually look at your score. If someone has an excellent credit score it being lowered can potentially ruin a lot of things a person may have lined up.