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Hundreds of Americans raised their credit scores by 120 points in a year, here’s how

Brittany De Lea

Some Americans have recently seen their credit scores decline despite strength in the U.S. economy but the good news is there may be a surefire way to bump it up by a significant amount.

In fact, one study found that Americans were able to lift their credit scores by more than100 points within a single year.

CREDIT SCORE ON THE DECLINE? THIS COULD BE WHY 

LendingTree conducted an analysis of nearly 1,000 people who raised their scores by an average of 128 points – from 594 to 722 – between August 2018 and August 2019, to examine the various methods they employed to do so.

IS YOUR CREDIT SCORE ACCURATE?

Here’s a look at the common patterns the researchers at LendingTree found within the sample group:

Reduced debt

  • The sample group reduced their average debt by $8,627 – or 6 percent – during the course of the year

Monthly payments fell

  • Monthly payments dropped by $192, excluding minimum payments for credit cards

Improved on-time payments

  • Average ontime payment rates increased

Paid off credit card debt

  • The sample group paid off, on average, $8,966 in credit card debt. More than 20 percent cut their credit card debt by 90 percent or more

Reduced credit card utilization rates

  • Credit card utilization rates fell to 23 percent from 55 percent, on average

Increased credit accounts

  • Nearly 60 percent increase their number of credit accounts – 51 percent added new credit cards

Some took out loans

  • Thirteen percent took out an auto loan, six percent took out a mortgage

Many of the people in the sample group raised their credit score either one or two ranges (i.e. from good to very good or excellent). Nearly 20 percent raised their credit scores from poor to fair and from poor to good. Twenty-five percent raised their scores from fair to very good.

A credit score between 670 and 739 is generally considered “good.”

One of the benefits of a higher credit score is lower-cost credit on loans.

As previously reported by FOX Business, credit scores among people aged 30 to 59 declined as of June when compared with April of 2018.

The potential culprit? Higher delinquency on auto loans, researchers posited.

Auto loan balances increased by $18 billion in the third quarter, according to the New York Federal Reserve Bank, to $1.32 trillion.

According to Experian, the average FICO score in the second quarter of last year was 703, though the average scores tended to vary by age. Americans between the ages of 20 and 29 had the lowest average score, 662, compared to people aged 60 and over, whose scores averaged 749. The state with the highest average credit score as of the second quarter – 733 – was Minnesota.

The average FICO credit score reached 704 in 2018, according to a report released by the scoring company, an all-time high.

As previously reported by FOX Business, there are mounting concerns that credit scores don’t accurately reflect the probability of repayment. During times when the job market is strong and wages are increasing, it is much easier to meet monthly payments – meaning credit scores may be increasing while overall creditworthiness has effectively remained the same.

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