With 5 billion credit card come-ons from banks annually, along with special offers, turning down credit card offers can be tough.

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Americans' Average Credit Score

­The credit score that haunts your dreams at night and can awaken you in a cold sweat is based largely on the history of your financial life. The three major credit bureaus (Experian, TransUnion and Equifax) have their own version of the FICO score, based on the mathematical model Fair Isaac refined in the late 1970s. Each of the credit bureaus' scoring systems is slightly different, which can result in different scores for a single person. As a result, lenders generally use the middle score for reference.

Credit scores are based on your payment history, how much outstanding debt you have, the length of your credit history, what type of credit you've received and the frequency with which you fill out new credit applications. The factors that have the most bearing are payment history and outstanding debt, which account for 35 and 30 percent of your score, respectively [source: Home Equity Mortgage].

What is a good credit score? While a perfect score of 850 is desirable, you'd get about the same lower interest rate with a score of 720 [source: WKOW]. Technically, there's no such thing as a "bad" credit score, since there's no universal score at which no one will consent to lend you money. You will, however, begin to feel the pinch with a score below 620. For a 30-year fixed interest loan with a FICO score of 620, for example, you may pay 7.693 percent interest. With a score of 619, the interest on the same loan could jump to 12.018 percent [source: Fair Isaac].

So 720 is the lowest good score and you can't get any lower than 300. But what's the average score for Americans? As of March 2008, Experian gave a national average credit score of 692. South Dakota had the highest average (710), and Texas had the lowest (655) [source: Rotblut]. What's the big reason behind the less-than-perfect score the average American lugs around? It turns out there are as many reasons as there are ways to hurt your credit score.

Missing monthly payments can really damage your score, as can carrying too much debt relative to your income. To keep your credit score in good shape, the general rule of 28/36 applies: A monthly mortgage payment shouldn't be more than 28 percent of your monthly gross income, and the total of the rest of your debt shouldn't be more than 36 percent of your gross income [source: Wall Street Journal]. Applying for too many credit cards can hurt Americans' credit too. Avoiding temptation can be difficult with the number of solicitations you receive -- in 2006, banks sent out 5 billion credit card applications [source: CNN].

Even with a few smudges on the average American credit score, 692 isn't bad, especially considering 720 is very good, right? Not necessarily. Ultimately, lenders are left to determine what constitutes a good score; the reporting agencies simply compile the numbers. Late 2007 and early 2008 saw the subprime mortgage fallout. Many subprime borrowers (or risky candidates) found they couldn't keep up with high monthly payments. With record numbers of loans being defaulted, lenders informally raised the lowest limit on what was considered a low-risk borrower. Whereas 680 was formerly a good enough score for someone to get a good interest rate, the score was raised to 720 in 2008 [source: Rotblut]. So, with a score of 692, the average American in 2008 is considered a subprime borrower.

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