The average credit score in America is now 710 according to Experian. Back in 2019, the average credit score was 703.
In other words, during a global pandemic, the average American improved their wealth and their financial health. Not only has the average credit score in America improved, the average saving rate has also improved from 6% to over 10%.
When the U.S. saving rate surged in 2020 to a high of 32%, so did lending standards.
Lending Standards Are Tightening
During a previous mortgage refinance in 2019, my loan officer said that he hadn’t worked with a borrower with under an 800 credit score in over two years. I was surprised to hear this because I clearly remember banks offering the best refinance rates when you had at least a 760.
At the beginning of my refinance process, the mortgage officer asked whether I had over an 800 FICO score. I told him I thought so. But I felt like I had been caught in a lie because I didn’t know for sure.
However, if I had said “no,” I felt like he would have hung up on me. He gave me this “you better not be wasting my time” vibe.
With the mortgage industry even tighter today thanks to so much demand, borrowers must really have their financial ducks in order to get the best rate.
For those interested, let’s review the fundamentals of the credit score.