Women's earnings still have a way to go in catching up to men's, but when it comes to credit, the two groups now share the same average credit score.
According to credit bureau Experian's data from the first quarter of 2020, women and men now share an average FICO credit score of 705. This is a 1-point increase for women from the second quarter of 2019 and about a 10-point increase for both groups since the second quarter of 2015.
Since the Equal Credit Opportunity Act of 1974, the financial services industry has made strides in creating more equitable lending practices and giving women more access to the same financial privileges as men. And as Mastercard recognized when it announced its True Name™ card initiative in 2019 for consumers who are trans and/or nonbinary, such financial inclusion is equally beneficial for members of the LGBTQ+ community as well.
With the average American's FICO score at a record high, one thing is for certain: More people than ever can enjoy the advantages of a good credit score — as long as they maintain it.
Below, CNBC Select breaks down what a 705 FICO score means and how a good credit score can help you in your life.
Using estimates from Experian, 705 is considered a good credit score on FICO's scoring model.
FICO Score Ranges
With a 705 credit score, you will likely qualify for a variety of credit products and loans but at a higher interest rate than someone with a very good or excellent score. When reviewing the credit reports of those with a 705 FICO credit score, Experian found that a third of them had late payments (30 days past due), 42% had an auto loan and 29% had a mortgage. The average consumer with a good credit score had 4.7 credit card accounts.
Having a good credit score comes with big advantages, such as qualifying for a lease on a new apartment and saving money on your car or homeowners insurance.
When it comes to your personal spending habits, a good credit score can also help you get approved for a credit card that comes with some perks on your purchases. CNBC Select rounded up the best credit cards for good credit and the Amex EveryDay® Credit Card made the ranking for its zero-interest period for the first 15 months on purchases and balance transfers (then 12.99% to 23.99% variable APR, see rates and fees). If you never carry a balance on your credit card, you won't need to worry about accruing interest. Still take note, however, that even with good credit you may have a higher interest rate compared to the lowest rates lenders have available.
The Wells Fargo Propel American Express® Card also ranked for its no annual fee and rewards program: 3X points on dining out, ordering in, gas, rideshares, transit, flights, hotels, homestays, car rentals and popular streaming services, and 1X points on all other purchases.
Even as women have caught up to men's good credit, consumers of all genders can continue building up their scores. Once applicants reach the very good and excellent credit score range, lenders likely offer better borrowing terms, such as a lower interest rate on auto loans or mortgages.
And with a better credit score in these high ranges, there is a greater chance of qualifying for the best rewards credit cards, such as the Citi® Double Cash Card that offers no annual fee and 2% cash back: 1% on all your purchases and an additional 1% after you pay your credit card bill.
If you feel far behind from a score of 705, you aren't alone. Experian's data shows that 40% of consumers have FICO scores that are lower than 705.
The best way to increase your credit score is to pay off lingering balances and focus on making all of your payments on time. Ideally, you want to make sure your total amount of debt is under 30% of your credit limit (this is known as your credit utilization ratio).
Signing up for a new credit card can actually improve your credit utilization ratio, since you'll have a higher total credit limit across your credit cards. However, having too many recent credit inquiries on your report can ding your score, so it's best to do a little research before you sign up for a credit card for average credit.
If you have fair or average credit, consider the Capital One® QuicksilverOne® Cash Rewards Credit Card for 1.5% cash back on all your purchases or the Petal® Visa® Credit Card, issued by WebBank Member FDIC, for no fees whatsoever and 1% cash back on eligible purchases (1.5% after you make 12 on-time monthly payments).
As you make on-time payments in full on your new credit card, you should see your score go up. But if you're worried that getting a new card will put you into further debt, you can focus on other steps first, such as building an emergency nest egg and working to pay off your existing balances.
For rates and fees of the Amex EveryDay® Credit Card, click here.
Information about the Amex EveryDay® Credit Card, Petal® Visa® Credit Card, Citi® Double Cash Card, Capital One® QuicksilverOne® Cash Rewards Credit Card, Wells Fargo Propel American Express® Card, TD Cash Credit Card, has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.