Report: Credit Scores Reach Record Highs, Risky Borrowers Reach Record Lows

American credit scores reached record highs for Spring 2017, while the number of Americans categorized as “risky borrowers” fell to an all-time low, according to a new report.

The improving economic situations of many Americans, which can be attributed to falling unemployment rates and slow economic growth years after the country has slowly recovered from the 2008 recession, could give way to growth in lending and economic activity.

The number of foreclosures and bankruptcies have declined among Americans, mainly because they are dropping off their credit reports. An estimated six million adults in the U.S. are slated to have their personal bankruptcies disappear from their records over the next five years with the passage of time, the Wall Street Journal reports.

When these personal financial setbacks disappear from consumers’ records, credit scores increase. Lenders look to these credit scores when deciding on whether or not to approve someone for a loan and what interest rate they should offer the consumer.

The higher the credit score, the more likely banks and lenders will lend to a consumer at a cheaper rate.

The average credit score among Americans nationwide hit 700 in April, the highest its been since 2005, according to Fair Isaac Corp., the company responsible for creating the FICO credit score range of 300-850.

Among large cities, San Francisco had the highest average credit score at 712, according to a 2017 WalletHub study of cities with the highest credit scores.

The share of risky consumers, or those with credit scores below 600, also decreased. In 2010, 25.5 percent of Americans with FICO scores were deemed “risky consumers,” but that number has dropped to 20 percent as of April 2017.

Americans may also see an automatic increase in their credit scores after July 1, thanks to an effort by the three major credit bureaus to remove things like tax liens or court rulings that result in paying someone money from credit reports, according to Business Insider.