Here's a quick question: What is the average U.S. credit score? The answer is 690. So, how close did you get? If you were pretty far off, that's okay. Before you can make an accurate guess, you need to know a few things. You need to have some idea of how the economy is doing. You also need to know what the full range of credit scores is.
On the first point, a declining economy can have a negative impact on credit scores. However, as of now the downturn in the economy has not had as much of an impact...yet. It's possible that it could still affect credit scores, so it makes sense to do what you can to maintain or improve your score, in spite of a sluggish economy.
Now onto the range of credit scores. A perfect score is 850, and the worst possible score is 300. A bit of quick math tells us that the average of those two numbers is 575. That's what the math tells us, but the national average credit score is 690. This is mostly due to the fact that no matter how tough things get, people still do their best to pay their bills, and pay them on time. Perhaps that can be attributed to the American spirit and the desire to keep one's word. Whatever the reason, the actual average of 690 is significantly higher than 575.
More confusion is added by lenders who do not disclose what the cutoff point is for different terms of loans. Not to mention that these points can change at any time, and for a variety of reasons. For example, while you may have had an easy time getting a good loan with a credit rating of 680 (10 points below average) just three years ago, it would be very difficult to get those same terms today.
So what kind of score do you usually need to get the best terms today? Again, each lender is different, but overall you will need a credit score of 720 or better to make sure you will get the best terms. That's quite a leap from 680, and 30 points above average. Lenders may have more stringent standards because the economy is affecting them as well, or it could be because they see everybody as a higher risk than they used to. Of course the reason doesn't really matter if you can't get the best terms for a loan, or if you can't get a loan at all.
You should also know that each state has its own average credit score. This means lenders have different numbers to work with in each area. States where the average score is 700 or higher are Iowa, Minnesota, New Hampshire, Massachusetts, Vermont, Montana, North Dakota, and South Dakota. States with the lowest averages (around 660 to 670) are Louisiana, Texas, West Virginia, Georgia, Michigan, Alabama, North Carolina, Nevada, New Mexico, Alaska, and Arizona.