Credit Scores Just Reached an 18-Year High. Here's What the Average FICO® Score Looks Like

Your credit score paints a picture of you as a borrower. It tells lenders how risky it is to loan you money or issue you a line of credit. And so the higher your credit score, the easier it becomes to not only borrow money, but borrow at a lower interest rate.

The most widely used credit-scoring method in the U.S. is that created by the Fair Isaac Corporation, now better known as FICO. And recent data from FICO found that the average consumer has a credit score of 718. That's the highest score on record since 2005.

If your credit score is higher than 718, congratulations. That means you may be in really good shape to borrow money the next time you need to.

If your credit score is lower than 718, it doesn't necessarily mean that borrowing is off the table. And to be fair, there's not much of a notable difference between a credit score of, say, 715 versus 718. A lower score may, however, mean getting stuck with a higher interest rate on your next loan.

If your credit score is a lot lower than 718, then you may want to work on boosting it. And here's how you can do that.

1. Pay all bills on time

Different factors are used to calculate credit scores, and the one factor that carries more weight than any other in that number is your payment history. Being late with a single personal loan or mortgage payment could significantly bring down your credit score. On the other hand, paying all bills on time consistently could help your credit score rise.

If your credit score needs work, make a list of your various bills and try to set up as many as you can to get paid automatically. That way, you know you won't be late. For the bills you can't put on autopilot, fill your calendar with reminders.

At the same time, work on boosting your savings account balance so you have cash reserves to tap. That could help you avoid a scenario where you're late paying a bill due to a lack of funds, as opposed to simply forgetting.

2. Pay down some existing credit card debt

Another factor that goes into calculating your credit score is your credit utilization ratio. This measures how much revolving credit you're using at once relative to your total spending limit across your different credit cards. Credit usage accounts for 30% of your FICO® Score.

A credit utilization ratio of 30% or less is considered favorable. So if you currently owe $4,000 on a $10,000 credit card limit, paying down $1,500 of that could leave you with 25% utilization instead of 40%. That could, in turn, lead to a boosted credit score.

Of course, finding the money to pay down credit cards may be easier said than done. But one thing you can do there is pick up a flexible side gig you work as time allows for. A gig like that could include driving for a ride-hailing service or signing up to house-sit at times that are convenient for you.

3. Check your credit report regularly

Your credit report is a snapshot of your borrowing history. It shows what loans and credit card balances you have outstanding and how current you are on your financial obligations.

It's important to check your credit report regularly -- ideally, about once every four months. The reason? A credit report can contain an error. If yours has one that paints you in a less favorable light, it could result in a hit to your credit score. But if you spot a mistake and correct it, your credit score could get a nice lift.

What sort of errors should you be looking out for? Pay attention to debts that are listed as delinquent that you know you've been timely with. Also, make sure your credit report doesn't reflect credit accounts (current or otherwise) that aren't actually yours.

If you see an open credit card or loan listed on your credit report that you don't recognize, investigate at once. It may actually be that someone opened a fraudulent account in your name.

It's good to see that the average U.S. credit score has gone up. But if yours needs work, take these steps to put yourself in the best position to borrow affordably when you need to.