Often when it comes to people’s personal finances, it’s all hushed tones and secrets. You’re too embarrassed to admit how little you’ve saved for retirement. Debt is kept in the dark — sometimes even from your own spouse.
But if you’ve got a good credit score, it’s all bravado.
And if some new figures are any indication, many people are probably bragging about their credit scores.
The average national credit score hit a milestone high recently, according to FICO, the company that created the scoring model used by most lenders.
FICO scores range from 300 to 850. The higher your score, the better. A stellar number can place you in a tier for receiving the best lending deals.
FICO looked at consumer credit data from April and found the average score hit 700 — a jump of 10 points from just before the Great Recession. That spread might not seem to be a lot, but it could make a huge financial difference during the length of your loan.
Let’s say you want to buy a home or car. A lender reserves its lowest interest rates for consumers with certain lending criteria that include a credit score range of 720 or higher. Fall below this threshold and you pay more for the money you borrow.
In a blog post (bit.ly/ficopost ) about the data, FICO says it has been seeing a lot of movement in the lower and higher ranges of its scoring model.
The percentage of consumers in the bottom ranges, people who typically have late payments or other negative credit information, has been dropping. And the share of people with “super-prime” scores of 800 or more has been increasing.
FICO also announced another milestone: Borrowers with credit scores of 800 or more outnumbered those with scores of 600 or below.
What’s with the uptick?
Better economic times and greater awareness of a credit score’s importance, the folks at FICO say. Plus, more lenders are giving people free access to their credit scores. I keep track of my score through a service provided by my mortgage lender. Here’s my latest score data:
FICO score: 841. (If you don’t have a perfect score, don’t sweat it. After a certain point, it doesn’t matter. If a lender is giving the best deals to customers with credit scores above 720, having a higher number — even the highly sought-after 850 — won’t give you any more advantage other than bragging rights.)
Credit rating: Excellent.
Credit bureau: Experian.
Score version: FICO Score 9. (It’s important to know that your score can vary because lenders may be using different and/or older versions of certain scoring models. You may get a score from FICO or VantageScore, which is a venture developed jointly by the three major credit bureaus — Equifax, Experian and TransUnion.)
Score frequency: Quarterly.
The rating came with this note from my lender: “The credit file used to calculate your FICO score is continuously updated, and as such your FICO score may not reflect the most current data on your credit file.”
If your credit-card providers or lenders do not give you free access to your scores, ask why. Press them. Knowing where you stand can help you manage your credit better. It’s also a defense against unscrupulous lenders who may try to charge you more with the hope that you don’t know how good your credit actually is.
With a score of 841, I might be tempted to boast. You, too, might be proud if you’ve crossed the 700 or 800 mark.
But don’t get smug about your number.
Keep in mind that your score represents your history of managing debt. I was reminded not to get arrogant about my score while watching an episode of the ABC sitcom “Black-ish.” In it, Andre “Dre” Johnson and his wife, Rainbow, realize their spending is out of control.
“We owe what?” Rainbow says after opening a bill. “How did we spend this much on our credit cards?”
“Don’t worry about that,” Dre says. “I have an 819 FICO score.”
Here’s what radio host Dave Ramsey says about such bragging: “Like it or not, your credit score is not an indicator of winning financially. All it tells you is whether you are good at borrowing money and paying it back. That’s it.”
I’ve counseled a lot of broke folks with FICO scores of 700 or higher. When it comes to your finances, it’s not the only number that counts.
Readers may write to Michelle Singletary at The Washington Post, 1301 K St. NW, Washington, D.C. 20071 or email@example.com. To read previous Color of Money columns, go to wapo.st/michelle-singletary.