Americans Grade Out At 'A' For Their Credit Scores
James Merse, a communications professional working in New York City, has a lot on his plate these days. Worrying about bad credit isn't a problem, though.
Merse, 23-years-old, is busy working in one of the biggest cities in the world, and with his life ahead of him, he wants to secure his piece of the American Dream.
"I'm purchasing a condo in New Jersey, and what I've found is that having a strong credit score helped me a lot," Merse says. "I've witnessed family and friends suffer financial blows a few years ago when the housing market dipped."
"But my parents have always had amazing credit, and we never felt the stress of financial trouble, despite living on a tight budget like most Americans," he added. "It was taught to me from a young age that without credit you have nothing in this world, and cash isn't always king."
That mindset (and that great credit) qualified Merse for a home loan with no problem, even with minimal money down. "I'll be closing on my condo shortly after the New Year, and I'm constantly watching my spending," he says. " I've opened credit card accounts and took small car and personal loans to build credit and ensure all payments are made on time."
Like Merse, Americans are, on average, in pretty good shape when it comes to their credit score and improving all the while. The U.S. consumer credit score, based on the cumulative averages of American adults, is 669, according to Experian's 2015 State of Credit study, released this week. Anything over 700 is considered by credit experts to be a good number.
The 669 national average credit score is three points higher than the one measured by Experian in 2014, and five points higher than in 2013, and it points to a healthier credit and lending landscape, the study states. "If I were to give a grade to the overall picture of credit in the United States, I would give it an A-," notes Michele Raneri, vice president of analytics and new business development, Experian. "I'm optimistic about the state of credit as we are seeing more loans being extended, late payments are decreasing and consumers are continuing to gain more confidence in originating loans."
"There definitely is growth and momentum - we're back to pre-recession levels in nearly every category, which means lenders are in a prime position to capitalize on this market and foster business growth," she says.
Experian also notes that bankcards, retail cards and mortgage lending showed significant growth this year, giving the U.S. consumer credit landscape a firmer platform for growth. Bankcard lending continues to increase, with new bankcards up 7.7%; retail card lending also is on the rise, with a 10.8% increase in new originations; while mortgage origination rose significantly, according to Experian.
The only downbeat note is in average individual debt, which has climbed to $29,093 per U.S. consumers, up 2.1% from 2014.
"The growing consumer debt average poses a problem for down the road because it impacts borrowing," says Leslie Tayne, a financial attorney in Melville, N.Y. "The more debt people have, the less borrowing they can do and the more impact they are likely it have on their credit. Americans should be concentrating on working to deal and manage their debt and rely less on growing it."
Few report cards are perfect and there's always room for improvement. But as U.S. consumers like James Merse are showing, school is in session on the credit front, and most Americans are just about acing all their tests.