Average Credit Score: FICO

The average FICO credit score model often works much better for a consumer than the commonly accepted middle score one. The average credit score was used primarily by sub prime lenders in the days of the infamous real estate bubble. Sub prime lenders lent money to the people with credit rating other than A or A-.

Today, the average FICO credit score model is also used by the lenders, but the number of banks using it is a far cry from the days of the past. And when you apply for a credit card or a car loan, instead of looking at your average credit score, creditors typically look at just one credit reporting agency FICO - either TransUnion, Equifax or Experian.

Now let's see the difference between the average FICO credit score and middle credit score models. With the latter, when a bank looks at your 3 in 1 credit report, it looks squarely in the middle. Check FICO score for more information. So if you have scores of 720, 676, and 660, bank takes 676 and your loan conditions such as interest rate, broker fees, etc. are based on the credit score of 676.

That means you just missed the credit score 680 by 4 points. And 680 is an important FICO credit score threshold you don't want to miss too often.

If a bank uses the arithmetic average credit score, here is how it works:

Add 720, 676, 660 and divide the result by 3. You will get average FICO of 685. This is much better score than 676, especially when you apply for certain mortgage programs where minimum credit score is required.

If you applying for a mortgage and your credit is not the best, it makes sense to check with your mortgage broker is he/she works with banks that use arithmetic average credit score. It may be to your advantage. And of course, even with some average efforts, you can improve credit score.

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