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What Your Credit Score Should Really Look Like By 30 Years Old

girl-walking

The other day, a friend I was hanging out with shared a sweet little moment with me, which occurred via text between herself and another girl we both know. The (remote) friend had reached out to her with some good news about a very important financial milestone she just hit, and felt overjoyed about it. My reaction to hearing the news between the two was joyous, but fleeting because we were headed out of the door, and I was subsequently distracted. However, the reaction between the pair of them stayed with me for the next several days, and I kept thinking about it every once in awhile. You see, the woman had successfully raised her credit score after a lot of hard work, patience, and diligence. She raised it to a really impressive number, and even amidst the blur of a busy work day, I felt really happy for her. “What a uniquely special bond,” I thought; friends sharing their badass financial successes and milestones with each other. It’s the thought of interactions like those that fill me with warm ~fuzzies~ of pride, and I’m genuinely thrilled to know that the friends around me take their financial goals seriously.

Sharing our financial triumphs with one another, and amping each other up to reach them is exactly what we try and advocate for here on TFD. And, it feels especially nice to watch someone achieve something as significant as earning herself a soaringly-high credit score — even from the distant sidelines. For a long time I, myself, kept plugging away day-in and day-out to build up my own credit score, and I’ve always tried to do everything I could to make on-time payments consistently. Now that I’m getting older (and getting closer and closer to 30, gah!), I know it’s time to work my hardest at building the kind of financial flexibility I want for myself. To me, 30 always seemed like a huge turning point where I would rid myself of whatever irresponsible behavior I was clinging onto, and refuse to be an impediment to my financial health.

Simply put, a big part of that means having the best possible credit score. I want to do big things with my life, earn money to do the things I love, support stuff I believe in, and generally work super hard toward the goals I set for myself (a la Chelsea’s post from yesterday!). So, about a year ago, I went out of my way to learn as much as I possibly could about how to actually acquire my own credit score, so I could start making a real financial plan and set goals for myself. (Link to different ways you can go about getting your score in a not-damaging way.) It turns out that there are a ridiculous number of credit-score related articles online, all filled with data, charts, and graphics that cover credit scores, and the average age at which a person builds X score. Since I’m 26 years old, and have now aged out of the good ol’ 18-24 bracket, I now look to the 25-34 age bracket (which serves as a sobering reminder of just how fast my 20s are going). So, 30 might seem to be an arbitrary age, but it’s not for me,

First off, it’s important to understand how your credit score is calculated, and what your credit score means on a scale of “bad” to “good.” This info will help you contextualize your own number. Once you have it, take a look at the chart below to gauge how well you’re doing.

credit score data-01

Chart adapted from Credit & The Simple Dollar

Once you know what you’re looking at, you can then compare your own score to the score of your peers to see if you’re on track, behind, or ahead of the curve. I looked into the average scores of different age brackets to see where I, myself, fell on the spectrum. Take a look at where the average 30-year-old sits on the credit-score spectrum.

credit score data-02

Chart adapted from Investopedia

As you can see, the average credit score of a 30-year-old falls between 640 and 660  It’s actually a little higher than I thought. If you are aligned with the average score of a 30-year old, than you’re right there along with nearly 24% of Americans. An article on The Simple Dollar explains various credit scores as a series of averages across the U.S., saying, “As we can see, a combined 24% of Americans had poor FICO scores below 600, while 22.9% were holding the middle ground between 600 and 699. Happily, more than 53% of Americans had good or excellent scores of 700 or above.”

Knowing that facts gives you the tools to take the information you have and more forward with a concrete #plan. Does your score need a little TLC, and what can you do about it if so?

If you aren’t on track (or haven’t yet met) the ideal score for someone aged 30 years, there are a number of useful strategies you can use to turn your score around, and make it higher and stronger. Below is a simple overview of the most common and effective strategies for doing so, which are:

Keeping under 30% credit utilization:
According to an article on Credit Karma, “Our data suggests an even better goal is to use your credit some, but keep the utilization rate under 20%. Creditors want to see proof that you can manage credit wisely–something you can’t do without using the credit you’re granted.” So, it seems like not needing to tap into all available credit is a good way to show lenders that you’re responsible. It’s also worth noting that you should try to pay off your balance in full each month so that you avoid paying any interest on charges.

Keeping hard inquires to a minimum:
What is a “hard inquiry” you ask? MyFico.com says, “Hard inquiries are inquiries where a potential lender is reviewing your credit because you’ve applied for credit with them. These include credit checks when you’ve applied for an auto loan, mortgage or credit card.” Asking for too many of these hard credit checks will reduce your credit score a few points at a time, more specifically “one additional credit inquiry will take less than five points off a FICO Scores.” To lenders, hard inquires typically signal you’re taking on some kind of additional financial obligation, which might affect your ability to pay back other debts.

Considering the number of accounts you have open:
Apparently, having multiple and varied accounts is beneficial to your credit score. Experts suggest you shouldn’t close older accounts, saying “15% of your credit score hinges on the length of your credit history. Once you see your credit report, it might be tempting to close those old, unused accounts, but that can actually hurt your score.” You want to keep them open and show as much of your credit history as possible.

If your credit score doesn’t reflect what the average 30-something has, it’s time to take action. But remember, it’s never too late to start making positive changes that will affect you for years to come. That one brief interaction between my two friends reminded me of the real value in having a financial buddy in your inner circle. It reminded me that when we are there for one another, when we build communities of real support, and when we encourage our friends and keep each other in check, we can get shit done in a BIG way. We can do the things that might have once seemed impossible to our past selves, and we can do it with a little help from our Financially Savvy FriendsTM. (<– lel)

Image via Unsplash

  • Mary Harman

    Word to the wise re: credit utilization
    Your score takes into account the ratio of debt versus your available credit. So, if you’re about to apply for a car loan or a mortgage, you can instantly boost your credit score (and likely better your chances at lower interest rates) by just calling your credit card and asking to increase credit limit! They sometimes ask why, and you can say ‘I’ve always paid on time, and I’ve got some expenses coming up that I want to make sure I can cover.’ They just want to make sure you’re not about to buy something ridiculous that you’ll never pay them for, so don’t get nervous if they ask!

  • alyjarrett

    Thanks for the reminder to check my Credit Karma account! 777 score at 26yo, so I’m feeling good!

    • Disqus1479

      Good job! But remember, Ck is not fico, but Vantage. Scores can be vastly different. My CK scores are aways higher by 15 to 20 points. My EQ score is actually about 50 pts higher on CK right now. I’ve heard of some people’s scores being off by even more than that though.

    • nuni2011

      I agree with the other comment. My Fico actually takes info from all bureaus rather than just one

  • Gianna Alvino

    One of the happiest moments was finally having 0 credit card debt. I focused the better part of a year and a half to do everything I could to bring up my credit score and get out of debt. I am finally over 700 and did a happy dance. It took me until 35 after lots of stupidity in my 20’s and being ignorant, but research and diligence paid off. It’s now nice to be in a place where I am apparently doing better than my peers!

  • jdub

    Wow I’m actually not as terrible as I thought!

    My boyfriend and I are pretty much on par with one another (within 5 pts). However, I’ve undergone a Consumer Proposal for my debt, whereas he just doesn’t really have much credit built up for himself. Very interesting to notice the difference.

  • Evelyn Wronkowski

    Lovelovelove this article. This site has been massive in helping me plan and manage my finances as an adultling, and I can’t thank you all enough for that. Heads up, though – I think you may have forgotten a link in the third paragraph!

  • Keisha

    I love this! It makes me feel really awesome to see where I stand among the averages right now! Last year I buckled down and focused in getting my credit score up, and this article really solidifies for me that I did a f’ing bangin good job 🙂 big smile for me! Thanks for giving hard numbers and thoughtful points.

  • Taryn Goodge

    As someone who works for a credit bureau, people underestimate the power of job history when it comes to borrowing. Your credit score is a huge part of borrowing, and at 22, I have 750+ score, but that doesn’t mean I will automatically qualify for a loan I apply for, even if I can potentially pay for it. My father has a credit score below 650 due to some bad financial decisions, but people are calling him up left and right to refinance his home primarialy because he has been employed by the same people for almost 30 years. Credit score does a lot, but consistency and financial reliability goes further.

  • Mia Moore

    This is a great article, but I think you left a little note to yourself in there – “(Link to different ways you can go about getting your score in a not-damaging way.)” 🙂

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