A person's FICO score, also known as a credit score, holds a lot of weight with lenders and creditors. Knowing your score, and how it compares to the national average FICO score, will help you know how banks and other creditors decide to approve your loan and at what interest rate. (Figures below are from November 2009.)
FICO Scores
FICO stands for Fair Isaac and Co. It developed the software most often used by credit reporting companies to apply a score to a person's financial habits.
Lowest States
On average, Nevada residents rank the lowest in the credit score ratings with a state average FICO score of 668. Texas, Mississippi, Louisiana and North and South Carolina are also all near the bottom of the list with average FICO scores of 670 to 674.
Highest States
Minnesota residents seem to have the best financial habits with a state average FICO score of 721. Other states with top average credit scores are North and South Dakota, Vermont and New Hampshire with average credit scores of 714 to 719.
National Average
According to Experian, one of the three major credit score reporting agencies, the national average FICO score is 692. Credit scores are on a scale from about 300 to 850.
Use of the FICO Score
Banks and other creditors use the national average FICO score to compare a consumer's credit score and determine how risky it would be to lend that person money. Someone with a score of 750, well above the national average of 692, would most likely get a loan easily and at the best interest rate. Someone with a score of 600 may have a harder time finding a loan at a low interest rate, or at all.
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