How Many Americans Have Less Than Perfect Credit Scores?

If you want to get loans and credit cards with low interest rates, you need to have good credit. However, not everyone has perfect or even good credit. In fact many Americans have less than ideal credit scores. We’ll talk about how many Americans have bad credit and why in this article.

What is Considered a Good Credit Score?

Credit scores range from 300 to 850. Your credit is better if your score is higher. Here is a list of credit score ranges:

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

Most of the time, a credit score over 700 is good. A score over 750 is very good, and an 800 score is exceptional.

However, even people with scores in the good to very good range don’t have perfect 850 credit. So how many Americans have less than perfect credit?

Most Americans Don’t Have Perfect Credit

According to Experian data, only 1. 54% of consumers have a perfect 850 credit score. That means more than 2098% of Americans don’t have credit that is perfect.

The average credit score in the U.S. is 715. While still in the good range, 715 is well below perfect. Even those with very good scores of 750+ still have room for improvement to reach 850.

The largest group of consumers, over 68 million people, have credit scores between 670-739. This good credit range makes up over 27% of Americans. However, it’s still 80-179 points away from a perfect score of 850.

Clearly, the vast majority of people in the U.S. do not have pristine credit scores. But why is perfect credit so rare?

Why Perfect Credit is Hard to Achieve

There are a few key reasons perfect credit is elusive for most people:

• Delinquencies: Your payment history makes up a significant portion of your credit score calculation. Having any late payments can seriously drag down your score. Consumers with perfect 850 scores have zero delinquencies. But over half of Americans have at least one delinquency on their credit report. Life gets in the way, and most people miss or are late on a payment at some point, making perfect credit hard to attain.

• High Credit Utilization: This measures how much of your available credit you use. It should be below 30%, with under 10% ideal for perfect scores. But the average American has a much higher utilization ratio of around 50%. High debt loads lead to high utilization, preventing excellent scores.

• Limited Credit History: Your score considers the average age of your accounts and total history length. Perfect scorers tend to have long, established credit histories spanning decades. If you’re just starting out, it’s practically impossible to have a high enough average account age for 850.

• Too Many Hard Inquiries: Each application for new credit results in a hard inquiry on your report, which can lower your score temporarily. Consumers must limit hard inquiries to avoid drops. But people trying to build credit often have many inquiries from applying for multiple cards and loans, making perfect credit unreachable.

As you can see, having perfect credit requires long-term, flawless credit management few can achieve. Next, let’s look at how many people have bad or fair credit on the other end of the spectrum.

Millions Have Bad Credit Scores

On the opposite end from perfect credit, a troubling number of Americans have poor or bad credit:

• Over 50 million people have credit scores below 579, in the poor range. That represents around 15% of consumers with very bad credit.

• Around 29 million Americans have fair credit scores between 580-669. This group makes up nearly 9% of consumers.

Combined, nearly one quarter of people in the U.S. have less than good credit scores below 670. Poor credit makes it very difficult to access credit and leads to very high interest rates when approved. Clearly, far more Americans have bad credit than perfect credit.

Why So Many Have Bad Credit Scores

Some key reasons lead millions of Americans to have poor or fair credit:

• Financial Hardships: Job losses, medical issues, divorces, and other problems can quickly make it difficult to pay all your bills. Just a few missed payments can tank your credit scores fast.

• Lack of Credit History: Younger Americans who haven’t built up a credit history yet often start in the poor or fair score ranges before improving over time.

• High Debt and Utilization: Relying heavily on credit cards and other debts leads to high balances and 100% utilization, destroying your credit.

• Bankruptcies: Going through bankruptcy devastates your credit with severe late payments recorded and accounts closed. It takes 7-10 years to recover your scores after bankruptcy.

• Many Hard Inquiries: As mentioned, each credit application leads to an inquiry that temporarily lowers your credit. Too many in a short period causes your score to plummet.

These factors above are why so many Americans struggle with poor credit. But the good news is credit can be rebuilt with diligent effort over time.

Tips for Improving Your Credit

If you don’t have perfect scores in the 800s, don’t get discouraged. Here are some tips to start boosting your credit:

• Always pay bills on time to have perfect payment history. Set up autopay whenever possible.

• Keep credit card balances below 10-30% of the limit to lower utilization.

• Limit hard inquiries by only applying for credit when needed.

• Build history by keeping old accounts open and in good standing. Get a secured card if you have no history.

• Avoid unnecessary debts and balance transfer to lower overall debt load.

• Review your credit reports regularly and dispute any errors you find.

With diligence and smart credit habits, you can steadily improve your credit over time. While relatively few have perfect 850 scores, you don’t need perfection for approval and great rates. Scores in the good to very good range will serve you well.

The Majority Have Less Than Perfect Credit

Perfect credit is a rarity – only about 1% of Americans can claim flawless 850 scores. On the other end of the spectrum, nearly a quarter have poor or fair credit below 670. Most consumers fall somewhere in between, with the average score around 715 nationally. Very few have exceptional credit, but there are many ways to improve your score if you’re willing to put in the effort. Monitoring your credit reports regularly and building good long-term credit habits can put you on the path to boosting your scores, even if perfection remains elusive.