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Wondering how your credit score measures up to the national average? The average American FICO® Score is 717. A perfect credit score is 850, which is not easy to achieve. That said, it’s also not necessary for most people.

Understanding what makes up your FICO® Score can help you improve your credit rating. Not only that, but it can also help you make more informed financial decisions and open up better opportunities. For instance, a high score will help you qualify for some excellent credit cards. Check out this list of our favorite options here.

Understanding credit scores

Credit scores in the U.S. range from 300 to 850, and are generally categorized from “poor” to “excellent.” Here’s a look at FICO’s breakdown:

• Excellent: 800 to 850
• Very Good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 579 and below

There is no doubt that getting yourself into that excellent range is beneficial — top perks include better rates on loans, credit cards, and mortgages. But even so, having a score in the good to very good range can be enough to qualify for competitive borrowing rates. So if you are near the average score of 717, do not fret; you are OK. Plus, there are ways to raise your score if that’s what you want.

The fact is, focusing solely on reaching that perfect 850 score is often not worthwhile. Once you’ve got an excellent score, the benefits won’t change much. In any case, it is often difficult to maintain a perfect score. It’s more realistic to keep your score above 800 — or even above 740. A very good score can lead to almost the same rates and benefits as an excellent one.

Tips to improve your credit score

There are several tried-and-true ways to raise your credit score.

1. Keep your credit utilization low

A key component of your credit score is called your “credit utilization”, meaning the percentage of your available credit that you are currently using. If, say, you have $50,000 in available credit and you use $25,000 of that, your credit utilization would be 50%

Experts recommend keeping your utilization under 30%. People with the best scores typically use less than 10% of their credit limits. If we take that $50,000 in available credit, it is good to use 30% of it, or $15,000. It’s even better to use 10%, or $5,000. The lower the amount you use, the better your credit score will be.

By keeping your balances low relative to your limits, you show lenders you’re managing credit responsibly. It will help if you’re trying to qualify for one of the best cash back credit cards or get great rates on a personal loan.

2. Monitor your credit report for accuracy

Billions of pieces of credit information are processed onto the credit reports of Americans every year. Given that high number, mistakes are made. It could be that someone with your same name had a bankruptcy and gets included on your report. Or perhaps a bill you paid is not shown as such.

As a result, it is a best practice to regularly monitor your credit report for mistakes. If you find any, the Fair Credit Reporting Act (FCRA) allows you to write to the credit reporting agency and demand that the mistake be rectified. Once it is, your credit rating may rise.

You can access a free copy of your credit reports from each of the three credit bureaus once weekly at annualcreditreport.com

3. Build consistency in payments

One of the most important factors in any credit score is your payment history. Paying your bills on time is crucial to maintaining a healthy score. Even a single late payment can significantly impact your score. Pay on time, and ideally, in full.

Remember, your credit score is more than just a number; it is a reflection of your financial habits. Creating good payment habits can raise an average score from 717 into the better realms of 740 and above.

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