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Published: Oct 31, 2023 4 min read

Your credit score is key to your financial identity. It's the metric that pretty much any lender uses to determine your worthiness as a borrower. So it's great news that the average American's credit score just reached a new high: It's now 718, up a couple points from a year ago.

Financial data company FICO is behind the most popular measure of credit — the FICO Score — and its new report shows that FICO Scores have improved to a record high. The company says that higher employment and some medical debts being removed from credit reports are among the forces driving this improvement.

Why credit scores are rising

According to FICO, the average credit score is now 718, which is well into the realm that's considered "good" credit. It's the highest ever average score reported by the company, and the first increase since April 2021, when the average was 716. America's average credit score has increased significantly during the pandemic years, rising from 708 in April 2020 to 718 today.

One reason for the recent improvement is that medical debts under $500 have been removed from Americans' credit reports. Credit bureaus have been planning to do this for a long time, and earlier this year, they finished implementing the change. FICO says that while the change didn't affect a huge number of borrowers, those who did have a medical debt removed from their report between April 2022 and April 2023 likely saw an increase in their FICO Score as a result.

FICO also points out that credit scores have inched higher partly because the unemployment rate has returned to pre-pandemic levels, near record lows. Naturally, higher employment means more Americans are earning wages, putting them in a better place to pay bills.

It's worth noting that while credit scores are on average the highest they've ever been, so too is the level of credit card debt. Earlier in the year, the total credit card debt of all U.S. borrowers surpassed $1 trillion, or almost $6,000 per household.

All said, the fact that the average score is up doesn't mean that the financial situations of their owners are improving, besides general credit worthiness.

How to improve your credit score

Having a high credit score can help you get approved for certain credit cards, as well as lower rates and better terms on mortgages, auto loans and more.

One of the best ways to improve your credit score is to make payments on time. Missed payments are a mark on your score, and timely ones are a sign of responsibility that will increase your score over the long haul. Setting up automated payments is a simple way to ensure that you're doing this. Paying off outstanding balances is also a good idea.

If you can help it, keeping your utilization rate low also helps. Using 30% or less of the total amount of credit available to you is best. You should also avoid closing out credit accounts, as doing this can hurt your score. Instead, consider downgrading your less-used cards.

Finally, you can get a boost to your credit score by finding and reporting errors that are hurting your score. Getting delinquent payments or accounts that aren't yours removed from your report will help your score.

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