A Quarter of Americans Have a Credit Score of 800, but Is That Overkill?

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Being an adult is a terrifying prospect. You've got to keep track of things like when you last washed your bedsheets, whose turn it is to cook, and maybe worst of all, your credit score. Those three little digits increasingly feel like they mean so much in our lives, especially when car insurance rates and even our potential for renting an apartment hang in the balance.

In Q3 2023, Experian, a credit reporting agency, found that 21.9% of Americans had credit scores in the "Exceptional" range, which is 800-850. And although that's lovely for them, it's a very high bar to set for yourself as an average consumer.

After a drawn-out and complicated divorce, my own credit has been left devastated, and I got to wondering just how important an 800 credit score really is after I saw that number. I mean, if almost a quarter of Americans have it, maybe I should, too.

But all the wishing in the world isn't going to take my now-580 to an 800 overnight, so we have to start where we are.

What is a typical credit score range?

Experian divides credit scores into five different ranges, some of which I've been doing my time in, so no shade if you're down on your luck right now and are working on credit solutions. I put them in a chart below.

As you can see, the largest percentage of customers, 28.1%, have "very good" credit scores, which range from 740-799.

According to the same Experian data set, the average customer's credit score at the end of Q3 2023 was 715, with older generations typically having much higher scores than younger ones. This makes sense, because the age of your credit file is part of the calculation, too.

Does having an 800 credit score matter?

Well, that depends on what kind of credit you need and how you intend on using it, but in general, you can borrow just as reliably with a 715 as you can with an 800. Sometimes you don't even need to be in the 700s.

Credit scores for car loans

If you're looking for a car loan, you may find that there's not really a minimum credit score. But there is penalty pricing based on your credit score. If your bank won't loan to you based on your credit score, try a credit union. My local credit union is where I got my auto loan years ago, and it had a matrix that just added to the APR based on your credit score.

Based on Experian data from Q1 2024, the average APR for a new car with a below-500 credit score was 15.62% and 21.57% for a new car. That's not great, but you're not locked out of the credit system. The rate for scores of 781 and above were 5.38% for new and 6.80% for used, but even scores of 661 and above earned 6.89% for new cars and 9.04% for used.

Credit scores for home loans

Home loans do typically have bottom credit scores, unlike auto loans, simply because they are much longer term loans that carry more risk due to their length. But even with a mortgage, you don't need anything like an 800 to do business.

FHA loans

In fact, FHA loans are often offered to people with 580 credit scores, and only require a 3.5% down payment. There are some lenders who may extend FHA loans to those with credit scores as low as 500, but you'll have to be an excellent applicant in all other areas and bring a larger down payment to the table.

Conventional loans

Conventional mortgages, those bought by Freddie Mac and Fannie Mae, have slightly tighter standards, but still don't require an 800 credit score. You can get the ball rolling with a 620 very easily, and although you might be offered better terms for a higher score, the variation in mortgage rates is not massive.

Recent data from FICO shows that a borrower with a 760 to 850 credit score may qualify for a rate of 6.488%; a borrower with a 660 to 679 may qualify for 7.101%; and one with a 620 to 639 might qualify for 8.077%. The difference between the top and the bottom is about 1.6%.

With a conventional loan, your credit score will affect how much mortgage insurance you pay. Unlike FHA's mortgage insurance premium (MIP) program, which includes a flat percentage of your balance as mortgage insurance, the private mortgage insurance (PMI) rate that comes with conventional loans is based on both how much you borrow and how strong your credit score is.

Credit scores for credit cards

Credit cards don't have the standards most people imagine -- in fact, there's almost always a credit card for any level of credit score. But solid credit card offers start around 580 and go up from there, with more desirable cards, like credit cards with cash back or points, offered to people with credit scores over 670.

Is an 800 credit score overkill?

An 800 credit score can be a powerful bragging right in the right circles, but it's hardly a requirement for modern life. As long as you can maintain a decent score, you'll have just as much access to affordable credit as the next person. So don't sweat it if your score is just average (or still making its way there).

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