Fair Issac Corp. (FICO), the creator of the score used by lenders to judge creditworthiness in America, say the average American credit score has reached a high of 700, CNBC reports.
Credit scores determine whether consumers are able to get loans for mortgages and car loans and, if they are approved for loans, how much they pay in interest.
The average credit score went down to 686 during the housing crisis when foreclosures increased.
Ethan Dornhelm, vice president for scores and analytics for FICO, said credit scores have increased at a steady rate since then.
“Consumers will likely qualify for the credit they want at favorable terms,” Dornhelm said, adding that a credit score of 700 is considered to be “very good.”
Credit scores of risky consumers, considered to be a score below 600, have also declined recently as the average credit score increased.
According to WalletHub, one of the reasons so many American credit scores are on the upswing is because the three major credit bureaus now require more documentation before civil judgments or tax liens appear on credit reports as of July 1.
The bureaus — TransUnion, Equifax, and Experian — say that civil judgments and a significant number of tax liens that appeared on consumers’ credit reports before the change will be wiped from those reports, causing the average credit score to go up by 10 points.