More consumers are now acquiring credit and are now trying to check up on how they fare as far as the national average credit score is concerned.

The Concept of the Credit Score

It was way back in the 1950s that your credit score came into being. It did so, when mathematician Earl Isaac and engineer Bill Fair, together, devised a mathematical formula, whole sole purpose was to help creditors analyze data. They invented the credit scoring system a radical system that caught on in the late 1950s and 1960s and has never looked back since. The formula has not remained the same and has evolved over the years as more and more American started depending on credit. The FICO score is any number between 300 and 850 and illustrates the credit worthiness of an individual.

The Average Credit Score

Everyone wants a perfect credit score, that is 850, but not everybody gets that score, however, even if your score is 720 or thereabouts, you will still get as much of a low interest rate as you would, if your score is nearer to the perfect credit score. There is a good credit score, but there is never a bad credit score as different lenders have different ways of looking at a score. Borrowers will however start to fill the pinch when their score goes below 600. This is when your interest rates start getting higher and your payment terms start getting stringent.

So, now you must have understand that the lowest good score here is around 720 and no consumer can allow his or her credit score to go below 300. Well, so now you must be wondering what the average credit score is for most Americans. According to the Experian result of March 2008, the average credit score of Americans is 692. However, as can be imagined this figure is liable to change on a periodic basis.

Bad or Good

Whether the average credit score is good or bad, is dependant on the perception of the lender. For some, it might be a good score, while for others it’s not that good at all. With the fallout with regards to sub-prime mortgage, in 2008, it was seen that many borrowers could not keep up with their pre-determined monthly payments. This is when lenders informally raised the lower limit of a credit score on low-risk borrowers. Therefore the former good score of 680 then became an also ran score, and 720 took its place. So even those people falling under the national average credit score of 692 are now being considered as sub prime borrowers.