The average credit score is a often used as a metric to determine if you have good or bad credit. While lenders ideally want to give money to people with excellent credit, if the credit rating system makes it too difficult for the average person to have excellent credit, they may fall back on the national average.
Your score is used in a number of ways beyond just getting a credit card or obtaining an auto loan. For example, your score can be used to:
– Reduce Your Auto Insurance Rates
– Help You with Job Interviews
– Allow You to Rent an Apartment
Employers now regularly pull employee and job applicants' credit scores. Employers figure that if you can not be responsible enough to pay your bills on time, how can they trust that you'll be responsible enough to show up to work and do a good job? Your credit rating is used not only to determine how likely you are to pay your bills, but it is often looked at to determine how organized and put together your life is. Someone dealing with bankruptcies and foreclosure, for example, may have many personal issues going on in their lives that would distract them from their jobs.
While the average credit score in the United States is 723, that is only considered good credit. If you want to qualify for the very best rates, lenders require a score over 760 to be considered having an excellent rating. However, if you fall below the average you can still get the financing you need, but it will probably cost you more money. That just means you'll have to set up for a smaller home or a car without the extra features and options.