Becoming a prime borrower is a good financial goal to have. And if you’re already there, maintaining your score will pay off.
Those with prime credit have an easier time getting approved for new credit cards and loans because their credit score is on the higher end. A high credit score indicates that you have the ability to pay your bills on time and carry low balances.
Card issuers and lenders have more confidence in lending money to a prime borrower rather than someone who is subprime because prime applicants are statistically less likely to default, or fail to make their payments. And even if both a prime and a subprime borrower qualify for the same credit card or loan, the prime cardholder will most likely receive better terms, a higher credit limit and a lower interest rate.
In fact, having super-prime credit can save you more than 3 times on interest payments.
So you can compare your own financials to that of the average prime borrower and see how you stack up, CNBC Select took a look at average credit score, income and debt. Using data from Experian, one of the three main credit bureaus, here is a snapshot of prime data across U.S. consumers.
Snapshot of a prime borrower: Their credit score
Experian’s most recent data from Q1 2020 shows that prime borrowers have an average 767 FICO credit score.
On the FICO credit score scale ranging between 300 on the low end to 850 on the high end, a 767 falls under “very good.”
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
If you have prime credit, it’s likely you fall within this range. According to Experian’s annual consumer credit review published in January of this year, a quarter (25%) of Americans held a “very good” credit score in 2019.
Having good or excellent credit will help you qualify for the best credit cards, many of which are now offering limited-time welcome bonuses. These are great opportunities that can save you money now and in the future, especially on travel.
For instance, Chase just released a massive 80,000-point bonus for the Chase Sapphire Preferred® Card — the bank’s highest ever bonus offer for this card. New Sapphire Preferred cardholders can earn 80,000 bonus points after spending $4,000 on purchases in the first three months from account opening. That’s 20,000 more points than the previous offer and is worth up to $1,000 when you redeem points for travel through Chase Ultimate Rewards®.
The popular travel card also rewards you for your purchases. Find out if you are eligible for Chase Sapphire Preferred’s new 80,000-point, limited-time welcome bonus here.
Chase Sapphire Preferred®
On Chase’s secure site
5X points on Lyft rides through March 2022, 2X points on travel and dining worldwide, 1X points on all other purchases
80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening — worth up to $1,000 toward travel when you redeem through Chase Ultimate Rewards®
15.99% to 22.99% variable on purchases and balance transfers
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Foreign transaction fee
- Points are worth 25% more when redeemed for travel via Chase Ultimate Rewards®
- Transfer points to leading frequent travel programs at a 1:1 rate, including: IHG® Rewards Club, Marriott Bonvoy™ and World of Hyatt®
- Free DashPass subscription for a minimum of a year when you activate by December 31, 2021
- Travel protections include: auto rental collision damage waiver, baggage delay insurance and trip delay reimbursement
- No fee charged on purchases made outside the U.S.
- $95 annual fee
- No hotel-specific perks or credits
- No introductory 0% APR
- Estimated rewards earned after 1 year: $1,256
- Estimated rewards earned after 5 years: $2,278
Rewards totals incorporate the points earned from the welcome bonus
Another option to consider is the new 100,000-mile welcome bonus that the Capital One® Venture® Rewards Credit Card is offering for a limited time.
Like the Sapphire Preferred card above, the Venture Rewards card also offers rewards on your purchases. Given traveling has slowed during the coronavirus pandemic, new cardholders can also redeem this bonus for a statement credit to cover their spending on food delivery, takeout and streaming services.
Find out how to earn its new welcome bonus offer here.
Capital One® Venture® Rewards Credit Card
Information about the Capital One® Venture® Rewards Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.
5X miles on hotel and rental cars booked through Capital One Travel℠, 2X miles per dollar on every other purchase
100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening or earn 50,000 miles if you spend $3,000 on purchases in the first 3 months
N/A for purchases and balance transfers
17.24% to 24.49% variable on purchases and balance transfers
Balance transfer fee
3% for promotional APR offers; none for balances transferred at regular APR
Foreign transaction fee
- 5X miles on hotel and rental cars booked through Capital One Travel℠
- Global Entry or TSA PreCheck application fee credit up to $100 every 4 years
- No introductory APR
- There’s a $95 annual fee
- Estimated rewards earned after 1 year: $1,466
- Estimated rewards earned after 5 years: $2,931
Rewards totals incorporate the miles earned from the welcome bonus
Snapshot of a prime borrower: Their income and debt levels
Prime borrowers have, on average, an estimated $98,206 yearly income and an average $110,110 in total debt, according to Experian’s Q1 2020 data.
It may first come off as surprising that consumers with good credit have debt. Debt isn’t desirable, but borrowing at good rates can be an important part of a financial plan. Over time, you can leverage your assets, like a home, to grow your wealth.
And it’s actually important for your credit score to have a mix of credit accounts. Your credit mix makes up 10% of your FICO credit score, so making on-time payments on everything from credit cards to student loans, car payments, plus a mortgage, shows that you can successfully manage different types of debt.
Experian provided the below additional data for the average prime consumer:
- Credit cards: 4.5
- Credit card balance across all cards: $6,236
- Additional retail / store credit cards: 3.4
- Retail / store credit card balance across all cards: $952
- Student loan balance: $37,705
- Auto balance: $19,889
- Mortgage balance: $216,070
As you look at this data, it’s important to note that with a higher credit score you likely get approved for credit cards with higher credit limits. This means that you could carry a balance on your credit card month to month and still maintain a low credit utilization rate, which helps keep a steady score.
While this can benefit prime borrowers, it’s always ideal to pay your credit card bills in full by the time they are due.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.